A clause in a lease agreement limiting use of a store and thus limiting competition may be cancelled

An owner of land leased for 999 years a store in a shopping center and the lease agreement limited the use of the store. The lessee argued that the restrictions are illegal and should be canceled.

The Court held that an owner of land has the right to prevent an improper use of the property, so that a contractual limitation on the use and alongside a possibility of changing the use is valid, even if it is for a very long time, because it is a contractual provision agreed on both parties. However, such provisions may be cancelled where the landlord unreasonably refuses to to change the purpose of use, or for reasons of prevention of competition in violation of the Antitrust Law. Because in this case the basis for refusal to change the purposes was reasonable and logical, the Court ordered the lessee to use the property in accordance with the limitation agreed in the agreement.