Our Supreme Court has stated that if there is an industry restriction agreement in a commercial building, not only the purchaser of the property but also the lessee, assignee, etc. are all bound by the industry restriction agreement, and unless a separate industry change procedure determined by the management team, etc. is followed, the industry restriction agreement remains in effect.
Regarding the geographical scope of the effect of an industry restriction agreement, our Supreme Court has ruled that a claim for prohibition of similar business due to a violation of an industry restriction agreement can be asserted against all stores located in the same building that normally forms the same commercial area, unless otherwise specifically provided for in the sales contract or management group regulations or other special circumstances.

Unless the industry restriction agreement is changed or abolished through management group regulations, etc., the industry restriction agreement should be considered to remain in effect for the duration of the commercial establishment. If the scope of the temporary effect is judged to be limited in a situation where there is no effective period for the industry restriction agreement in the management group regulations or sales contract, unexpected damages may occur to those who expect to monopolize the industry in the same commercial establishment and receive sales or tenants. Therefore, the scope of the temporary effect of the industry restriction should be limited under the strictest possible conditions. Even if the agreement is deemed valid, there is also the issue of how to ensure its effectiveness.
In cases of violation of industry restriction agreements in sales contracts, our Supreme Court has ruled that “since such agreements stipulate the necessary means to achieve the reasonable goals of promoting the convenience of apartment complex residents, increasing the common interests of merchants, and maintaining the smooth functioning of commercial buildings, they cannot be said to infringe upon the freedom of occupational choice or property rights guaranteed by the Constitution, nor are they against public order and morals. Also, such agreements cannot be said to be simply instructive or advisory in nature. Therefore, if a purchaser who has purchased a commercial building based on the above agreement changes the industry designated at the time of sale without permission after moving in, the sales company may exercise its right to terminate the agreement on the grounds of the purchaser’s failure to fulfill the obligation to refrain from unauthorized changes in industry.”

A competitor in the relevant business has the right to demand a business ban in order to prevent damage to business interests. In the end, if the industry restrictions by agreement are violated, the parties to the agreement can demand that the violation be stopped, the consequences eliminated, preventive measures taken, etc., and further, other sanctions stipulated in the agreement or regulations can be taken.