PowerPoint 6 Flashcards
Privity of Contract
Relationship between contractual parties.
Parties
People who created the contract.
Only ___ can sue under contract.
Parties.
What are exceptions to the general rules of privity?
- Assignment.
- Trusts.
- Statute.
- Employment.
Assignment
Process of transferring contractual rights.
What are forms of assignment?
- Equitable assignment.
- Statutory assignment.
- Assignment by operation of law.
Equitable Assignment
You can sign away the benefits of the contract, but not the liabilities.
Can you assign away a mortgage?
Yes, but it is ill advised. You can still be on the hook for liability. Equitable assignment says that only benefits, not liability can be transferred.
Statutory Assignment
Means there is a statute (like a copyright act) that allows you to assign away the benefits and liability, as long as you follow a process.
Best example of statutory assignment is…
Copyright law.
Assignment by Operation of Law
Examples include contracts surviving through death (with estate), going bankrupt (contracts are dealt with by trustee).
Contract survives death through ___.
Estate.
Does an offer survive death through estate?
No.
Trust
Property held for benefit of another.
What are the parties to trust?
Settlor, trustee, and beneficiary.
Settlor
Party placing property into trust.
Trustee
Party holding property.
Beneficiary
Party entitled to benefit of property.
Who can enforce contracts made by the trustee?
Beneficiary of trusts.
Who is the legal owner during the time of the trust?
The trustee.
Who is the beneficial owner during the time of the trust?
The beneficiary.
Can the beneficiary sue the trustee if the trustee makes a bad decision investing for the trust?
Yes. Beneficiary of trusts can enforce contracts made by the trustee.
Blind Trust
You are kept in the dark where your money is being invested (lose legal rights). You are both the settlor and the beneficiary. You get the money when the conflict of interest ends.
Can the beneficiary force a blind trust?
Yes.