Textbook Notes (363,094)
Canada (158,187)
MGSC30H3 (57)
H Laurence (33)
Chapter 12

Chapter 12 Notes

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University of Toronto Scarborough
Management (MGS)
H Laurence

Chapter 12 The Extent of Contractual Rights NotesPrivity of Contract y privitya person cannot incur liability under a contract to which he or she is not a party y by this rule parties to an agreement may not impose a liability on another who is not a party to the contract except in those circumstances where the law imposes liability y under certain circumstances a person may acquire liability under a contract negotiated by others if the person accepts land or goods that have conditions attached to them as a result of a previous contract y in this case the person would not be a party to the contract but nevertheless would be subject to liability under it Prior Interests in Land y an important exception to the privity of contract rule concerns contracts that deal with the sale lease or transfer of land y purchaser of land takes land subject to rights of others who have acquired prior interests in property or rights of way over land y the purchaser is usually aware of the restrictions before the purchase is made however with the exception of some tenancies all restrictions running with land and all rights of third parties must be registered against the land in most jurisdictions y consequently the person acquiring the land has notice of the prior agreements at the time of the transfer of title y actual notice of an unregistered contract concerning the land may also bind the party depending upon the jurisdiction and the legislation relating to the transfer of interests or land Constructive Trusts y the second part of the rule relating to third parties concerns the acquisitions of rights by a person who is not a party to a contract but upon whom the parties agree to confer a benefit y trustagreement or arrangement whereby a party called a trustee holds property for the benefit of another called a beneficiary Assignment of Contractual Rights Novation y novationthe substitution of parties to an agreement or the replacement of one agreement by another agreement y this process does not conflict with the privity of contract rule because the parties by mutual consent agree to terminate the original contract and establish a new agreement in which the third party who was outside the original agreement becomes a contracting party in the new contract and
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