Mr. Black enters into a contract with Build-It Construction Ltd. for the construction of a house. The house is not built in accordance with the contract. Mr. Black sues Build-It Construction Ltd. seeking $200,000 in damages. He is successful, but discovers that Build-It Construction Ltd. has insufficient assets to satisfy the judgment as it regularly transfers its assets to its parent company Build-It Holding Company Inc. Can Mr. Black collect the $200,000 from Build-It Holding Company Inc.
A) Yes, according to the doctrine of promissory estoppel.
B) Yes, according to the Statute of Frauds.
C) Yes, this is a statutory novation.
D) No, according to the doctrine of privity of contract.
E) No, according to the parol evidence rule.

Question

Quizplus · Accepted Answer

The doctrine of privity of contract states that a contract cannot confer rights or impose obligations arising under it on any person except the parties to it. Therefore, Mr. Black cannot collect the $200,000 from Build-It Holding Company Inc. because they were not a party to the original contract between Mr. Black and Build-It Construction Ltd.

Mr Black Enters into a Contract with Build-It Construction Ltd