Ontario Mortgage Agent Practice Exam

Under the doctrine of privity of contract, who can enforce the terms and conditions of a contract?

1. A court order that prohibits a party from doing something or acting in a certain manner

2. Only the parties to a contract may enforce it

3. A condition for financing which allows the Borrower to cancel the contract if he or she cannot obtain mortgage financing

4. The offeror and offeree in a contract

The correct answer is: Only the parties to a contract may enforce it

Explanation The doctrine of privity of contract means that only the parties who are directly involved in a contract are able to enforce its terms and conditions. This means that anyone who is not a part of the contract, such as a court or a third party, cannot enforce the contract. Option A is incorrect because a court order is not a party to the contract and therefore cannot enforce it. Option C is incorrect because obtaining financing is not related to the ability to enforce a contract. Option D is incorrect because the offeror and offeree are just the terms used to refer to the parties who are making and accepting the contract, not who can enforce it.