Why Do Parties Who Are Not in Privity of Contract

question 35

Multiple Choice

Why do parties who are not in privity of contract usually not have rights to a contract?

• A) Because of the statute of frauds.
• B) Because contracts are private agreements between parties who each agree to give or do something for the other party.
• C) Because it would be against public policy to provide rights to a contract to those without privity.
• D) Because it would be too difficult to determine who has contractual rights if privity of contract is not required.
• E) Because privity of contract is necessary to ensure a contract is in compliance with the UCC.

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Definitions:

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made at specific intervals, rather than continuously.

Adjusted Trial Balance

A list of all accounts and their balances after adjusting entries are made, used to prepare financial statements.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary accounts to permanent ones, preparing the company's books for the next period.

Fabricated Products Company

A business that specializes in manufacturing and selling products made from raw materials through various processes.