Which of the following best describes the doctrine of privity of contract?
Correct Answer
A) Only parties to a contract can enforce or be bound by it
The doctrine of privity of contract establishes that only parties who are directly involved in making a contract can enforce its terms or be held liable under it. Third parties generally cannot sue or be sued under a contract to which they are not a party.
Why This Is the Correct Answer
Option A correctly defines the doctrine of privity of contract, which is a cornerstone principle in contract law. This doctrine establishes that contractual rights and obligations exist only between the parties who actually entered into the agreement. Under Canadian contract law, including real estate transactions governed by provincial legislation like TRESA, only the contracting parties have the legal standing to enforce terms or be bound by obligations. Third parties, regardless of how they might be affected by the contract, cannot sue for breach or be held liable under the agreement unless they are specifically named as parties to the contract.
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