Competition landlord; a defect?

So what if your landlord puts your business in competition? In special cases, competition by the landlord may constitute a defect within the meaning of Article 7:204 of the Civil Code.

A defect exists if the item cannot provide the lessee with the enjoyment that a lessee, upon entering into the contract, may expect from a well-maintained item of the kind to which the contract relates. The circumstance must not be attributable to the lessee. The starting point in a lease is that a tenant should expect to have to reckon with some competition. What matters is what is the reasonable expectation that the lessee was entitled to have when entering into the lease and thus must be assessed on a case-by-case basis.

The Amsterdam court recently ruled on an issue where the municipality, also the landlord, requested the tenant to install a photo kiosk and subjected the tenant to strict conditions in order to set up its business. Subsequently, the municipality placed a passport photo machine in the civic affairs department. The tenant took the position that there was a defect. The court ruled that the tenant made it sufficiently clear that she was promised exclusivity by the municipality at the start of the lease. Incidentally, that was not in the lease agreement.

The exclusivity is assumed because the municipality asked the tenant to place the photo kiosk. In addition, the lessee had to fully comply with the municipality's wishes in its operation with its opening hours. The court ruled that the tenant did not have to expect that the municipality would compete with it by also installing a passport photo booth itself.

In addition, the court added that even if the placement of the passport photo machine were not a defect, it would then be a landlord's obligation not to impose competition on a tenant from the same building. This follows from the general rules of reasonableness and fairness. Accordingly, the court finds that the municipality caused harm to the tenant.

The premise of case law is that a tenant may not be inflicted with competition if that tenant is in a dependent position. The infliction of competition does not necessarily constitute a defect in all cases. This will have to be considered on a case-by-case basis. However, it is wise to seek advice at the time your landlord inflicts competition on you, or you intend to engage in certain activities as a landlord that may have a competitive effect.