Davidson Bros., Inc. v. D. Katz & Sons, Inc., 643 A.2d 642 (1994), was a case decided by the Appellate Division of the Superior Court of New Jersey that first applied public policy considerations instead of the touch and concern doctrine when deciding the validity of a restrictive covenant.
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Factual background
Davidson Bros., Inc. operated several grocery stores in downtown New Brunswick, New Jersey. After vacating one inner city supermarket, Davidson added a restrictive covenant not to compete to the lease for the vacated property. The covenant disallowed the lessee from operating another grocery store in the space.
Decision
The Appellate Division of the Superior Court of New Jersey held that the covenant not to compete was invalid because it was against public policy. The availability of supermarkets in inner city areas was essential to fighting urban blight, and this could not be outweighed by the property interests of Davidson. This usage of public policy grounds instead of the touch and concern doctrine for analyzing covenants predated the same technique used in the Restatement Third of Servitudes.