Looking at Covenants Licences and Leases

Addressing the issue of privity of contract first it can be noted that as Target And Leslie PLC are the original parties to the contract there is both privity of contract1 and privity of estate between the parties. When Target assigned the lease to Ace he created a new relationship between Ace and Leslie Plc. As there is no contractual relationship between Ace and Leslie the relationship between these would only be one of privity of estate. Likewise when Leslie Plc sold the property to Rake the relationship between Rake and Target or Rake and Ace would only exist as privity of estate3 as there is no contractual relationship between these parties. The sublet of part of the property to Simon creates neither privity of estate nor privity of contract as there was no agreement with Rake to allow this sublet. As there is no privity of estate between Rake and Simon Rake cannot force Simon to adhere to the covenants.

The case of R v Tottenham and District Rent Tribunal Ex p. Northfield (Highgate) [1957]6 gives rise to the implication that where a privity of contract exists all covenants are binding whereas the case of Pacific Wash-a-Matic v RO Booth Holdings [1978]7 would appear to suggest under privity of estate only the covenants which are regarded as typically part of the landlord and tenant relationship will be bound8. The burden and benefit of covenants where there is the only privity of the estate only cover covenants that touch and concern the land as were decided in Spencers Case (1585).

Having discussed the relationships of the parties and established with whom there is privity of estate and privity of contract and with whom there is neither it is necessary to examine the circumstances when the burden and the benefits pass with the assignment. For completeness, it is important to consider the position if the lease had been created before 1996 as well as the&nbsp.position for leases created after this date.&nbsp.