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Chapter 11

Chapter 11 - Privity.docx

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Department
Business
Course
BU231
Professor
Shelley Mc Gill
Semester
Fall

Description
Chapter 11: Privity Privity of Contract - The general rule is that a contract does not advance any benefits or impose and obligations on a stranger to the contract - To succeed in action to contract, must prove privity to contract Exceptions to Privity of Contract Rule - Tort o Alternative solution o E.g. poisonous salmon - Vicarious Performance o Requires consent of promise o Third party performs on behalf of promisor o Third party can still be sued for tort o Promisor can still be sued for breach of contract - Novation o Parties to contract agree to terminate the original and substitute a new contract o Two types:  Parties change subject matter of the contract  One party leaves, another replaces them - Exemption Clauses o Protection against tort liability o Blocks attempts to sue unless not acting within standard of care - Trusts o Trustee: Administrator of the trust o Beneficiary: Person entitled to the trust o Rules of equity recognize the beneficiary (true owner) o Trust cannot be revoked unless beneficiary consents - Insurance o Husband pays premium in exchange for promise from insurance company to pay sum of money to specified person after their death who is not a part of the contract (same for auto insurance) - Land o Privity of contract does not apply to land o If owner leases land to tenant, then sells to a new owner  Tenant still must perform the promises to new owner  New owner must respect tena
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