Assignment’s Effect on the Dual Relation of Privity of Estate and Privity of Contract - What effects does assignment have on the dual relation of privity of estate and of contract?

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Introduction - Assignment is one of those areas in which the details of landlord-tenant law may be a bit different from what's expected. This is because of the effects that assignments have on the dual relation of privity of estate and of contract.

The two privities are normally intertwined in the rent-for-possession exchange but, when an assignment occurs, they become unraveled from one another, so each operates separately.

The “reserved” rent obligation goes one way, while the contractual rent obligation goes another. As a result, not only the assignee but also the assignor can be held liable for rent.

The Anomalous Result - The fundamental “cause” of this anomalous result is the contracts-law rule: contract duties cannot be assigned.

Thus, contract rights can be assigned, and contract duties can be “delegated” (i.e., you can get someone else to do it for you), but contract duties can’t be assigned. And when contract duties are delegated, the assignor remains liable.

Rationale - Do you see reason for this rule on non-assignment of contract duties? (If it were otherwise, wouldn't just about everybody rush to assign away all their unwanted duties to impecunious others?)

Hypothetical - Venable leased a storefront to Schumann for 10 years, reserving a rent of $5,000 per month, which Schumann promised to pay.

Question - Which of the following is the best statement?:

(1) Schumann had an obligation to pay rent based on both privity of contract and on privity estate.

(2) Schumann had an obligation to pay rent based on privity of estate.

(3) Schumann had an obligation to pay rent based on privity of contract.

(4) Schumann had a contractual obligation to pay rent, but none based on “privity of estate.”

Answer and Explanation - The correct answer is (1). Schumann’s “estate” obligations to pay rent arose from the reservation of rent and his contract obligations arose from his promise to pay.

The two rent-payment obligations, estate and contract, exist side by side, and normally don’t seem to be in any way “separate.” But they can be separated, as we’ll see.

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