Don't Accept Ambiguous Definition of 'Merchandise' in Use Clause

February 12, 2019

An increasing number of retailers sell both new and “vintage” or consigned merchandise. But if you want a retail tenant’s space to be used solely or primarily for sales of new merchandise, then you’ll need to say this in the lease’s use clause. And be aware that using a term other than “new”—such as “retail”—may backfire, letting the tenant move its new merchandise to another location and keep less profitable, used merchandise at its space in your building or center.

An increasing number of retailers sell both new and “vintage” or consigned merchandise. But if you want a retail tenant’s space to be used solely or primarily for sales of new merchandise, then you’ll need to say this in the lease’s use clause. And be aware that using a term other than “new”—such as “retail”—may backfire, letting the tenant move its new merchandise to another location and keep less profitable, used merchandise at its space in your building or center.

Why? The term “retail” could include both new and used products sold to consumers. If nothing in the use clause requires the tenant to use the premises to sell “new” merchandise, only “retail” merchandise, you could be out of luck.

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