Relativity of contracts is a legal principle that refers to the idea that a contract only creates obligations and rights between the parties involved. This means that only those who have agreed to the terms of a contract are bound by it.
In other words, the relativity of contracts principle dictates that a contract cannot be enforced against a third party who was not involved in the original agreement, even if that third party may benefit or be affected by the contract.
For example, if you enter into a contract to sell your car to a buyer, the contract only creates obligations and rights between you and the buyer. The contract cannot be enforced against a third party, such as the buyer`s friend who is helping them purchase the car, even if the friend will be driving the car frequently.
However, there are some exceptions to the relativity of contracts principle. One of the most common exceptions is when a contract includes a provision that benefits a third party, such as a beneficiary in a life insurance policy.
In such cases, the third party has the right to enforce the contract, even though they were not involved in the original agreement. This is known as a third-party beneficiary contract.
Another exception to the relativity of contracts principle is when the contract was intended to benefit a third party, even though they were not a party to the agreement. This is known as a contract with incidental beneficiaries.
For example, a construction company may enter into a contract with a client to build a new office building. The contract may require the construction company to use high-quality materials to ensure the safety of the building`s occupants.
Even though the contract is between the construction company and the client, the occupants of the building may benefit from the use of high-quality materials. In this case, the occupants may be considered incidental beneficiaries of the contract, even though they were not involved in the original agreement.
In conclusion, the relativity of contracts principle is an important legal concept that ensures that contracts only create obligations and rights between the parties involved. However, there are some exceptions to this principle, such as third-party beneficiary contracts and contracts with incidental beneficiaries. As a copy editor, it is important to be familiar with legal terms and principles like the relativity of contracts in order to accurately communicate these ideas to readers.