Don't Say ‘Ladies’ Apparel' in Use Clause

A retail tenant may ask that you let it use its space to sell “ladies' apparel” at your center. But if you agree to use these words in the lease, you may be unwittingly letting the tenant sell more than you intended, warns Toronto attorney Harvey M. Haber. That is, the tenant may have the right to sell any type of clothing worn by women—even clothing that was manufactured for men. You could be in hot water if you already gave another tenant at your center an exclusive to sell men's clothing.

‘Ladies’ Apparel' Includes Men's Clothing

For example, a Louisiana subtenant's use clause restricted it to selling “ladies' apparel.” When the subtenant started selling men's clothing at the space, the sublandlord sued it for violating the use clause. The subtenant argued that it hadn't violated the use clause, since it sold “unisex” apparel—that is, pants, jackets, and shirts—that could be worn by either women or men.

A Louisiana appeals court ruled that the subtenant hadn't violated the use clause. The court said that the use clause was ambiguous because “ladies' apparel” could be defined narrowly—as clothing manufactured exclusively for women. Or it could be defined broadly—such as clothing that may be worn by women, although not expressly made for women. In this case, the ambiguity would be interpreted against the sublandlord because it drafted the lease, the court said. So the court picked the broader definition of “ladies' apparel” [Convert-A-Bed, Inc. v. Salem].

Practical Pointer: To avoid becoming the victim of a similar ruling, don't say in a use clause that a tenant can sell “ladies' apparel,” says Haber. Instead, if you want to restrict the tenant's clothing sales to women's clothing, say that the tenant's use is restricted to the “sale of clothing manufactured exclusively for women,” he advises. And to ensure that no other type of clothing is sold at the space, also say in the lease's prohibited use clause that the tenant is “prohibited from selling unisex and men's clothing,” Haber adds.

CLLI Source

Harvey M. Haber, QC,/LSM: Partner, Goldman Sloan Nash & Haber LLP, 250 Dundas St. W., Ste. 603, Toronto, ON M5T 2Z5; (416) 597-3392.