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into a lease agreement with a lessee. The lessee then assigned
its leasehold interest to an assignee. The Tennessee Court of
Appeals stated:
Before there is privity of contract between the
assignee and the lessor, there must be an actual
assumption of the lease. In the case at bar there was
not an actual assumption, only a mere acceptance of an
assignment. [Id. at 161.]
Respondent argues that, by analogy, the subsidiary is in the same
position with petitioner as was the assignee with the lessor in
First Am. Natl. Bank. Respondent claims that the subsidiary
received no rights from petitioner because the subsidiary had no
direct sales agreement with petitioner, just as the assignee had
no lease agreement with the lessor in First Am. Natl. Bank.
First Am. Natl. Bank involved a leasehold interest in real
property that existed at the time of contracting. Thus, when the
lessor and lessee entered into the original lease agreement, the
lessee received a leasehold property interest in the real estate.
In the case at hand, the telephone systems were not in existence
when petitioner and the third-party customers entered into the
purchase agreements. Thus, there was no property in which the
third-party customers could acquire property interests. The
third-party customers received only contractual rights to
purchase the telephone systems at a later date. Before the
property came into existence, the third-party customers assigned
their contractual rights to the subsidiary. When the property
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Last modified: May 25, 2011