Business 8th Edition by Marianne Jennings

Exercise 17

In April 1965, Berkeley Heights Shopping Center leased 11,514 square feet of space to A P Supermarkets. Under the terms of the lease, Berkeley agreed not to lease any other shopping center space to another grocery store. On April 16, 1977, A P informed Berkeley that it was ceasing operations and subleasing the premises to Drug Fair, a modern drug store chain that sells foodstuffs. In 1985, Berkeley sought to lease other space in the center to another grocery store, and Drug Fair objected on the grounds of the covenant not to compete. Berkeley maintains the covenant only applies when the premises Drug Fair occupies are used as a grocery store operation. Who is correct? [ Berkeley Dev. Co. v Great Atlantic Pacific Tea Co., 518 A.2d 790 (N.J. 1986)]