The issue of whether a commercial lease subleasee can sue the landlord under the terms of the master lease has arisen in recent litigation and is becoming increasingly important. In California, there is legal authority that suggests a subtenant can sue the landlord under the terms of the master lease, even though there is no privy of contract, provided the subtenant assumed the obligations of the master lease. This is an area of the law that is continuing to develop.
A real world example of why this issue is important follows.
A landlord and a tenant enter into a master lease where the landlord agrees that the tenant shall have the exclusive right to sell coffee for the entire commercial shopping center. The tenant then sublets its leased premises to a subtenant. The subtenant continues to sell coffee pursuant to the terms of the master lease and assumes all of the obligations of the lease. The landlord later allows another tenant at the same commercial shopping center to sell coffee in the shopping center in violation of the exclusive use provision in the master lease. The subtenant can then sue the landlord for breach of the lease.
