Chpt 11: Privity

Question 1

What must be proven in order to win a contract lawsuit?

Answer 1

Privity of contract, that is a relationship existed between two parties via a contract

Question 2

Can a third party win a contract lawsuit?

Answer 2

No, since they do not have privity

Question 3

Is there a contract that exists between the buyer and sellers of goods?

Answer 3

Yes, there is an implied contract that the goods are reasonably suited for the purpose for which they are sold

Question 4

If I bring salmon home that causes my entire family to be sick, can I sue my grocery store? Can my family?

Answer 4

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

Question 5

Is there a contract between me and a salmon manufacturer?

Answer 5

No there is no contract, but a duty of care may exist

Question 6

Is Vicarious performance allowed?

Answer 6

Yes, unless the contract says otherwise

Question 7

How does a trust work?

Answer 7

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.

Question 8

Can a beneficiary enforce the trustee agreement?

Answer 8

Yes, even though the beneficiary doesn’t have privity, he can enforce the terms of the trust

Question 9

If my great aunt dies and she has life insurance, can I force the insurance company to pay us?

Answer 9

Yup, insurance is another exception to privity

Question 10

If my agent makes a contract with Kyle on my behalf and Kyle doesn’t know who I am, am I still liable?

Answer 10

Yeah

Question 11

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?

Answer 11

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.

Question 12

When do exemption clauses hold for third parties

Answer 12

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

Question 13

What is assignment?

Answer 13

When a party transfers an unperformed right or benefit of a contract to a third party

Question 14

Can obligations or liabilities be assigned in contracts?

Answer 14

Nope

Question 15

Are owed obligations considered personal property?

Answer 15

Yes, it is considered intangible personal property.

Rights to intangible property are called choses in action and may be enforced in courts

Question 16

What are the ways a third party can gain privity to a contract?

Answer 16

• Vicarious performance
• Exemption clauses apply to 3rd party
• Trusts
• Insurance
• Agents make contracts on behalf of principal
• Land
• Assignment

Question 17

What is equitable assignement?

Answer 17

When only clear intention to assign all or part of a contractual benefit be show.

Question 18

Who must be involved in legal action during equitable assignment?

Answer 18

The assignor, the assignee and the promisor

Question 19

What is required for assignment to be considered statutory?

Answer 19

1) The assignment was absolute, no condition and complete
2) It was in writing
3) The promisor received notice

Question 20

What is special about statutory assignment?

Answer 20

The assignor no longer has to join in a lawsuit between the assignee and promisor

Question 21

What is a negotiable interest?

Answer 21

A written contract containing a promise to pay a specific sum of money to the bearer

Question 22

What happens when the promisor fails to pay for the negotiable instrument?

Answer 22

The promisee can sue either for breach of the original contract or failure to honor the negotiable instrument

Question 23

What happens if I assign a negotiable instrument to a third party?

Answer 23

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

Question 24

Can asignees succeed in action where the assignor would not?

Answer 24

Yeah if a negotiable instrument was legally handed over