Chpt 12-14 Flashcards
(37 cards)
What is the rule of privity?
A person cannot incur liability under a contract to which he or she is not a party.
Name 6 exceptions to the privity rule:
- Land (person taking over land takes over previous agreements)
- Trusts (trustee holds property for the benefit of another - beneficiary are not a party but can enforce it’s terms)
- Formal seal contract (if someone non-party is benefiting, they can enforce the agreement)
- Beneficiary (non-party) under a life insurance policy can enforce the contract because original party has died
- Tort (end-users of product can sue mnfctrs under tort for injuries if no contract exists)
- Collateral warranty (can enforce a warranty for a product even if you did not purchase it)
What is novation?
Mutual agreement to amend the terms or parties to an existing agreement (common in creditor/debtor relations)
What is equitable assignment?
An assignment that could be enforced if all parties could be brought before the court. (can only assign benefits/rights, not liabilities/obligations)
What are choses in action?
Paper document that represents a right or interest that has value (e.g., a share certificate).
What is vicarious performance?
Performance of a contract by a third party, where the contracting party remains liable for the performance.
What is statutory assignments? Which 4 conditions must the assignee satisfy?
Assignment of rights that an assignee may enforce if certain conditions are met by the assignment.
1. Ass. in writing & signed by assignor
2. Assignment is absolute
3. Notice of assignment is given to party charged
4. Assignment taken subject to any equities between original parties
What is “set off”?
When two parties owe debts to each other, the payment of one may be deducted from the other (balance is paid to extinguish the indebtedness)
How can transfer of rights be accomplished?
- Novation (parties all agree)
- Equitable (all ppl can appear in court) & statutory (in writing and proven/not all ppl present in court) assignment
- Vicarious performance (3rd party/subcontract)
- By operation of law (ex. death)
Explain the nature of performance:
Contract must be performed by parties in accordance with terms, must be exact in order to be discharged, anything less is default liable for breach of contract)
What is breach of contract?
Failure to perform a contract in accordance with its terms.
What is “force majeure” clause?
A major/unforeseen/unanticipated event outside of the control of the parties that prevents the performance of a contract. Eliminates liability from damages resulting (*CLAUSE WRITTEN INTO CONTRACT STATING POSSIBLE EVENTS)
What is express term?
discharge by the occurrence of an event specified in the contract.
Explain termination as a right:
Option to terminate by one party giving notice to the other (ex. time limit attached at expiry of notice period)
*If done improperly may be liable for damages for
improper termination
What is a frustrated contract?
Contract under which performance by a party is rendered impossible due to an unexpected or unforeseen change in circumstances affecting the agreement. (General common law principle (not stated in contract))
What is condition precedent?
A condition that must be satisfied before a contract may come into effect.
What is a waiver?
An express or implied renunciation of a right or claim (only affective if consideration is given)
What is “doctrine of laches” and Limitations Act?
Law can discharge a contract when too much time passes (laches: undue delay or limitations: actions not brought within specific time limit)
Name 6 methods of discharging an obligation of an agreement
- By mutual Agreement
- As a Right (option to term.)
- Doctrine of Frustration (Ext.event)
- Operation of Law (bnkrpt/limitations act/laches)
- Condition Precedent
- Condition Subsequent (Act of God/Implied Term/Express Term)
What is doctrine of substantial performance?
Where a party that has committed a breach has largely performed, the injured party cannot unfairly avoid their own performance, but is entitled to a deduction in price, or damages.
What is a subsidiary (second) promise?
Similar to doctrine of substantial performance, allows for damages but not rescission (warranty where a sale of goods is concerned)
What is a fundamental breach?
Breach of the contract that goes to the root of the agreement
(Can rescind contract AND sue for damages or losses - can no longer accept any further benefits)
What is implied repudiation???
Not expressly repudiated but through from actions of party or implied statements made
(Performance over a period of time which is inadequate may be implied repudiation)
What happens with breach in contract in regards to warranty?
In the sale of goods, a minor term in a contract. (Injured party can sue for damages, but NOT rescind the agreement)
