To begin with, it is imperative to note that, once a lease has been assigned to the new tenant, they are liable for their breaches of covenant. However the solution to this query depends on whether the assignment of the lease complies with the criteria stipulated in Spencerâ€™s Case (1583) (5) Co Rep 16a. These requirements are as follows:
In this matter, the lease inter alia meets all the above criteria. Consequently, the covenant in the head lease is legally binding to Jabba.
The characteristics of a lease were laid down by the House of Lords in the case; Street v Mountford  AC 809.Lord Templeman stated: â€œTo constitute a tenancy the occupier must be granted exclusive possession for a fixed or periodic term certain in consideration of a premium or periodical payments.â€ However, in yet another case law; Ashburn Anstalt v Arnold , contradictory to Street v Mountford , it was concluded that the payment of rent is not a requirement. This is because it is not contained in the definition in section 205(xxvii), LPA 1925. From that standpoint, the best manner in which Esmeralda can resolve this matter is through the forfeiture of the lease:
When a property owner forfeits his tenantâ€™s lease, he effectively revokes the lease, leaving the tenant with nothing. In order for the property owner to forfeit the lease, there has to have been a breach of contract and a forfeiture clause in the lease. It is solely up to the property owner as to whether he/she will forfeit the lease. A lease may be rendered forfeit either for:
In this matter, Jabbaâ€™s failure to pay rent for ten months is enough ground for Esmeralda to render the lease forfeit.
As mentioned in the matter above, for the property owner can forfeit the lease where there is a breach of other (non-rent) covenants. However, we need to consider in what circumstances covenants become enforceable between the old property owner and a new tenant. The answer to this query depends on whether the assignment of the lease complies with the criteria from Spencerâ€™s Case (1583) 5 Co Rep 16a.
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