Which statement is true of the privity principle? a. Only the party or parties subject to a contract are obligated by the contract terms. b. Any party or parties providing services to fulfill a contract are obligated by the contracts terms. c. both A and B d. none of the above

Which statement is true of the privity principle?
a.   Only the party or parties subject to a contract are obligated by the contract terms.
b.   Any party or parties providing services to fulfill a contract are obligated by the contracts terms.
c.   both A and B
d.   none of the above

Answer

• a.   Only the party or parties subject to a contract are obligated by the contract terms.
  Explanation:
  According to the privity principle, contract cannot confer rights or impose obligations upon a person who is not a party to the contract. This implies that only individuals who are part of the contract can sue to enforce their rights or sue to claim damages. Parties providing services for fulfillment of a contract are not obligated if they are part of the contract itself because there are third parties who are not part of the contract but involved either way in its fulfillment.