Chpt 11: Privity Flashcards
What must be proven in order to win a contract lawsuit?
Privity of contract, that is a relationship existed between two parties via a contract
Can a third party win a contract lawsuit?
No, since they do not have privity
Is there a contract that exists between the buyer and sellers of goods?
Yes, there is an implied contract that the goods are reasonably suited for the purpose for which they are sold
If I bring salmon home that causes my entire family to be sick, can I sue my grocery store? Can my family?
I can sue the grocery store for breach of contract.
My family cannot sue for breach of contract but they might be able to sure for damages in tort
Is there a contract between me and a salmon manufacturer?
No there is no contract, but a duty of care may exist
Is Vicarious performance allowed?
Yes, unless the contract says otherwise
How does a trust work?
Property or something of value is transferred to a trustee to administer
It is administered for the benefit of a beneficiary who is a third party in this contract
Since the trust was created to benefit the beneficiary, he is the beneficial owner.
Can a beneficiary enforce the trustee agreement?
Yes, even though the beneficiary doesn’t have privity, he can enforce the terms of the trust
If my great aunt dies and she has life insurance, can I force the insurance company to pay us?
Yup, insurance is another exception to privity
If my agent makes a contract with Kyle on my behalf and Kyle doesn’t know who I am, am I still liable?
Yeah
I am renting land from Lou. Lou sells the land to Kyle.
Can Lou kick me out?
Do I still have to keep land in good repair?
No Lou cannot kick me out and I do have to keep land in good repair, this is because when dealing with land, people who acquire interest in land are subject to the rights and obligations of earlier contracts.
When do exemption clauses hold for third parties
If
1) The parties to the contract intend to extend the protection to the third party
2) The activities for which the third party is being protected for were conducted within the scope of the contract’s activities
What is assignment?
When a party transfers an unperformed right or benefit of a contract to a third party
Can obligations or liabilities be assigned in contracts?
Nope
Are owed obligations considered personal property?
Yes, it is considered intangible personal property.
Rights to intangible property are called choses in action and may be enforced in courts
What are the ways a third party can gain privity to a contract?
- Vicarious performance
- Exemption clauses apply to 3rd party
- Trusts
- Insurance
- Agents make contracts on behalf of principal
- Land
- Assignment
What is equitable assignement?
When only clear intention to assign all or part of a contractual benefit be show.
Who must be involved in legal action during equitable assignment?
The assignor, the assignee and the promisor
What is required for assignment to be considered statutory?
1) The assignment was absolute, no condition and complete
2) It was in writing
3) The promisor received notice
What is special about statutory assignment?
The assignor no longer has to join in a lawsuit between the assignee and promisor
What is a negotiable interest?
A written contract containing a promise to pay a specific sum of money to the bearer
What happens when the promisor fails to pay for the negotiable instrument?
The promisee can sue either for breach of the original contract or failure to honor the negotiable instrument
What happens if I assign a negotiable instrument to a third party?
This is known as negotiation and no notice need given to the promisor.
If the NI is only owed to the promisee, the promisee must endorse to give to the third party
Can asignees succeed in action where the assignor would not?
Yeah if a negotiable instrument was legally handed over
