Humber/Ontario Real Estate Course 1 Exam Practice

Privity of contract is a legal term that signifies:

1. A witness can enforce a contract between a buyer and a seller.

2. Only the parties involved in a contract can enforce it.

3. A brokerage representing both buyer and seller can enforce the contract.

4. All land sale contracts must be in written form.

5. A contract can be enforced by any involved third party.

6. A notary public has the right to enforce real estate contracts.

The correct answer is: Only the parties involved in a contract can enforce it.

Privity of contract is a fundamental legal principle that states that only the parties directly involved in a contractual agreement have the right to enforce that contract. This means that if you are not one of the individuals who entered into the contract, you cannot compel performance nor seek damages for breach of that contract. In the context of real estate, this principle is especially important because it delineates who has legal rights and obligations under a contract. For instance, if a buyer and a seller enter into a purchase agreement, only those two parties have the standing to enforce the terms outlined in that agreement, barring any specific statutory rights that may allow third parties certain enforcement capabilities in limited circumstances. The other choices provided refer to various concepts related to contracts and their enforcement but do not accurately reflect the essence of privity of contract. This reinforces the idea that understanding this principle is crucial for anyone involved in real estate transactions, as it clarifies the legal relationships and responsibilities among the parties engaged in a contract.