California First-Year Law Students' Exam (Baby Bar) — MCContractsHard
A tenant assigns their lease to a new tenant (assignee) with the landlord's consent. The assignment agreement states that the original tenant (assignor) is released from all future obligations under the lease. Six months later, the assignee defaults on rent payments. Who is primarily liable to the landlord for the unpaid rent?
- AThe original tenant (assignor) is primarily liable, as they remain in privity of contract with the landlord.
- BBoth the original tenant and the new tenant are jointly and severally liable.
- CThe new tenant (assignee) is primarily liable, and the original tenant is secondarily liable.
- DOnly the new tenant (assignee) is liable, as the original tenant was released from all future obligations.
Show answer & explanationAnswer & explanation
Correct answer: D. Only the new tenant (assignee) is liable, as the original tenant was released from all future obligations.
When an assignment includes a release of the assignor from all future obligations, the assignor's contractual relationship with the landlord is terminated. Therefore, only the assignee is liable for future breaches, such as defaulting on rent. Without a release, the assignor would typically remain secondarily liable.
Why the other options are wrong
- A. This is incorrect because the explicit release clause terminates the assignor's privity of contract and their liability.
- B. This is incorrect for the same reason as A and B; the release clause severs the original tenant's liability.
- C. This is incorrect. The release clause means the original tenant is not even secondarily liable for future obligations.
Assignment with Release
An assignment of contractual rights and duties where the original obligor (assignor) is explicitly released by the obligee (landlord) from their original contractual obligations.
- Requires agreement of all three parties (assignor, assignee, obligee).
- Original obligor's liability is terminated.
- Distinguished from novation (which replaces entire contract/party).
Memory trick: Assignment with Release: It's like passing the baton and then leaving the race entirely.