Professional Documents
Culture Documents
PRIVITY OF CONTRACT:
B also can’t sue C even if they signed the contract together because B hasn’t given any
consideration to C
Third person can enforce a contract in certain cases, tort liability fills the void left by the
application of the privity contract rule
Vicarious performance:
Vicarious performance: a third party performs contractual obligations on behalf of the promisor
who remains responsible for proper performance
Must be allowed to get someone else to do it (so often for jobs where you don’t care who would
do it like painting)
Third party taking over contract doesn’t face contractual liability but faces tort liability
Employers often protect themselves from liability with an exemption clause
Exemption clause: a clause in a contract that exempts or limits the liability of a party
Trust:
Trust: an agreement that transfers property to a person who administers it for the benefit of
another person
Trustee: a person or company who administers the trust
Beneficiary: a person who is entitled to the benefits of a trust or the person entitled to receive
insurance monies
Beneficial owner: a person, who although not the legal owner, may compel the trustee to
provide benefits to him
Trust agreement: the document that conveys the property to a trustee to be used for the
benefit of a third-party beneficiary
Always 3 parties to a trust, the settlor, the trustee and the beneficiary
Insurance:
Insurance contract is between you and insurance company but if you die money goes to your
spouse (for example), so beneficiary has the right to force the insurance company to pay
ASSIGNMENT OF RIGHTS
Sometimes party wants immediate performance and may transfer the unperformed right or
benefit of the contract to a third party who is willing to wait for performance
This is an exception from the privity of contract rule
EQUITABLE ASSIGNMENTS:
Only require that a clear intention to assign all or party of a contractual benefit be shown either
orally or in writing
Assign: transfer to another person outside of the contract
If there is a court action between the promisor and the assignee, the assignor needs to be there
too (if the assignor still has an interest in the contract and hasn’t passed off all the benefits to
the assignee). If the assignor assigned everything, they don’t need to be involved in courts
because they have no real interest
STATUTORY ASSIGNMENTS:
The Need for Reform:
An assignee can sue the promisor without joining the assignor in the lawsuit provided that:
o The assignment was absolute (unconditional and complete)
o It was in writing
o The promisor received notice of it in writing
An assignment that complies with these things is a statutory assignment
Statutory assignment: an assignment that complies with statutory provisions enabling the
assignee to sue the other party without joining the assignor to the action
Equitable assignment: an assignment other than a statutory assignment
Bankruptcy:
Receiving order: a court order to commence bankruptcy proceedings
If you’re bankrupt, the court will appoint a licensed trustee to take charge of your property
They must liquidate assets and settle your claims
NEGOTIABLE INSTRUMENTS
Their Nature and Uses:
Special type of assignments
Negotiable instruments: a written contract containing a promise, express or implied, to pay a
specific sum of money to a designated person or to “bearer”
Ex. Bank draft, promissory note, cheques, they are a promise to pay a specific sum of money to a
named person or to the “bearer”
Created to satisfy a payment obligation in a prior contract, promisee will often sue when they
try to redeem payment but can’t
Promisee can assign an instrument to a third party
Currency:
Money is a special type of negotiable instrument
Rules of transferability and negotiation are even more relaxed
Equitable assignment:
Partial or conditional in nature; promisor must receive notice of assignment before obligated to
pay
Assignor must participate in any lawsuit
Subject to the equities
Statutory assignments:
Provincial statutory requirements: complete (not partial), unconditional, and written
Promisor to receive notice of transfer before being obligated to pay
Assignor need not participate in any lawsuit
Subject to the equities
Negotiable Instrument:
Federal statutory requirements: Bills of Exchange Act applicable to promissory notes, cheques,
bills of exchange
Promisor need not receive notice before obligated to pay
Previous holders need not participate in any lawsuit
Not subject to the equities (except for consumers)
Currency special rules