June 2007

By Jane Snoddy Smith and Bryan Wesley Patrick

Exclusive use provisions form the foundation of the economic relationships between tenants and landlords in shopping centers across the United States. Landlords make use of these provisions to obtain the right tenant mix in their shopping centers as well as to demand premium rents from the tenants that desire these economic protections. Tenants desire exclusive use provisions to gain the competitive advantages and protections that such provisions afford to their products and services. With the proliferation of so-called “big box” retailers in shopping centers and the phenomena of over-retailing in communities throughout the United States, exclusive use provisions are increasingly coming under attack. In Tippecanoe Assocs. II, LLC v. Kimco Lafayette 671, Inc., 829 N.E.2d 512 (Ind. 2005), the Supreme Court of Indiana entered the fray on this issue with a decision that affects the way these provisions should be drafted. This article, through a discussion of the court’s decision in Tippecanoe Assocs. II, LLC, describes how exclusive use provisions are coming under attack and practical ways to draft around these issues and to protect landlords and tenants with exclusive use provisions in retail leases.

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