In order to determine how much rent Tony owes Lois, if any, we must first consider the type of
estate that Tony had and the rights of each of the parties. Here, Tony had the leasehold estate of a
term of years with Lois. A term of years is a tenancy of fixed duration, created in advance by the
landlord and tenant, which ends by expiration of the fixed duration (does not require notice).
Upon this expiration, the tenants possessory rights automatically expire and the landlord may
retake. Here, the term was for one year, with no mention of any renewal or continuance of
possession thereafter, and rent was to be paid monthly.
Next, we must consider whether Tony properly transferred his interest to Amy. Absent a
provision to the contrary, tenants are free to assign, sublease, or otherwise transfer their interests
to a third party. Under the objective majority rule, an assignment occurs when the tenant in
possession transfers the entire remainder of his lease term. In this instance, the lessee’s
possessory rights end, the assignee’s possessory rights begin, and the lessor and assignee are
obligated to each other for lease covenants that run with the land. This is because the assignee
remains in privity of contract with the lessee, and privity of estate with the lessor, and the lessee
remains in privity of contract with the lessor. Privity of contract means that both parties have
rights and duties under the same contract, while privity of estate means that both parties have
rights and duties under the same land. Under the same objective majority rule, a sublease occurs
when the tenant in possession transfers possession which is less than the entire remainder of the
lease term. In this instance, the landlord-tenant privity is unchanged, and the sublessee has no
rights or duties to the landlord. This is because the sublessee is in privity of contract and estate
with the sublessor. In a subjective minority jurisdiction, whether the transfer is an assignment or
sublease turns on the intent of the parties. As we saw in Conditt, just because the language of the
contract says sublease does not mean that it is a sublease. Here, the facts indicate that Tony and
Amy had an oral agreement for “all of the rest” of Tony’s lease. Accordingly, because Tony
would not be reentering, this would be an assignment in both an objective and subjective rule
jurisdiction. The oral agreement would be enforceable because a lease for less than a year does
not need to comply with the Statute of Frauds.
However, next we must consider whether Lois was within her rights to not consent to Tony’s
transfer to Amy. Most modern leases require that the landlord consent to the transfer. There are
three different standards that typically govern consent. First, some leases contain a sole
discretion clause. This allows the landlord to refuse consent for any reason whatsoever. Second,
some leases contain a reasonableness clause. This allows the landlord to refuse consent only on a
commercially reasonable basis. Third, some leases have a “silent the consent clause,” meaning
they contain no standard. The majority of jurisdictions find that a silent consent clause provides
that a landlord can refuse consent in her sole discretion, while the minority of jurisdictions find
that it provides the commercially reasonable standard, as we saw in Kendall v. Ernest. Here, the
lease provided that Tony could sublease “only if” Lois consented. It does not contain any
language regarding the grounds required to refuse consent. Accordingly, this is a sole discretion
clause. If there was a commercially reasonable requirement, Lois would argue that it is
commercially unreasonable for an increasingly successful coffee shop to be taken over by
someone (Amy) without any experience with coffee shops, or that the competition across the
road will take business away from her shopping center. Tony would argue that he previously
didn’t have any experience with coffee either, and Amy at least had 5 years of experience
running an ice cream shop. However, because this is a sole discretion clause, Lois was within her
rights to refuse consenting to Tony subleasing space #7 to Amy. Thus, there was no transfer and
Tony and Lois still have full rights and obligations to each other through privity of contract and
estate. Accordingly, Tony had no legal basis to withhold rent at this point.
Next we must consider whether Tony was constructively evicted from space #7. A constructive
eviction occurs when there is wrongful conduct (act or omission) by the landlord that
substantially interferes with the tenants beneficial use and enjoyment of the leased premises to
the extent that it constitutes the equivalent of an eviction. In a traditional majority jurisdiction,
the tenant must also vacate the premises within a reasonable time; the modern trend, and a
minority of jurisdictions do not require this. Before the tenant can claim constructive eviction, he
must first notify the landlord and then allow the landlord reasonable time to fix the problem.
Again, in a traditional majority jurisdiction he must then also vacate the premises within
reasonable time if the problem is not fixed. Constructive eviction generally applies to
commercial leases. Here, we have the act of Lois erecting a Christmas display in front of the
shop. Tony will argue that this act is wrongful as it created a nuisance as it blocked the view of
the coffee shop from the road, and occupied the 10 closest parking spaces to the coffee shop.
Lois will argue that it was not wrongful because it did not block any actual access to the shop.
While these arguments may be close, Tony fails to satisfy the following 2 requirements. The act
does not substantially interfere with the use of the property as evidenced by the fact that his
profits did not substantially drop. They stagnated around the same number just as they did the
month prior. Given that the interference was minimal at best, it does not amount to the functional
equivalent as an eviction. Additionally, while Tony did evict the premises, he did not notify Lois
that the display was a problem or allow her reasonable time to fix the problem. Accordingly, a
constructive eviction did not occur in majority or minority jurisdiction.
Finally, we must consider the rights and options of each party in terminating the tenancy to
determine who is liable to who for what. As determined above, Tony did not have any legal basis
for ending the tenancy. A tenancy can either end by its term, surrender, abandonment, or eviction.
Here, the lease was not over for another nine months, thus it did not end by its term. There was
no mutual agreement to terminate the lease, thus no surrender. According to the Restatment
Second of Property, an abandonment occurs when a tenant vacates (a) without justification and
(b) without any present intention of returning and (c) he defaults in the payment of the rent.
Here, Tony had no legal justification, his actions of moving his furniture and equipment into his
new store show his intent to not return, and he stopped paying rent in November. Accordingly,
Tony abandoned the property. In a majority modern jurisdiction, the landlord’s options in this
instance are to either terminate lease or mitigate damages. In Sommer v Kridel, the court found
that landlords must attempt to mitigate damages. To mitigate damages, the landlord must make
reasonable efforts to relet the property to a new tenant. The landlord can then sue for damages
for any money lost while mitigating. Here, Lois unsuccessfully attempted to mitigate for nine
months. Accordingly, she can recover at least $45,000 for the nine months that Tony was out of
possession and she was attempting to mitigate, if not the full $55,000. Traditional Jurisdiction.