The Privity of Contract of Simons Company - Research Paper Example

Business Law Simons Co. is a company located in China which manufactures and exports furniture in Europe. Ajax Co., a local distributor of furniture in UK carried out a contract with Simons Co. to import 5,000 units of different categories of furniture by no later than May 01, 2010 at London Port at a total price of $950,000. Under the Privity of Contract, both the parties had legal enforceable rights over each other since the contract demanded that each one of them will carry out his performance diligently and no other party can intrude in between there matters.

This case had a condition precedent attached to it since the buyer of furniture is demanding that the furniture should be imported by no later than May 01, 2010 at London Port. If Simons Co. fails to export the requested items by the required date than Ajax Co. is declared free from making any payment since the condition precedent has not been fulfilled. Simons Co. being a multinational organization has the ability to borrow funds from international sources. It had initially borrowed fund amounting to $950,000 from Bank of England.

So within the contract, Simons Co. contracts Ajax Co. to pay $950,000 to Bank of England if the contract is executed. The Bank of England is basically the creditor beneficiary in this case. On the other hand, by the virtue of law of assignment Ajax Co. transfers his rights to receive the furniture to Magna Co. which is a local dealer of furniture. Simon Co. was facing buoyant demand in its country and had tough time in meeting the contract. So it further refines the terms and condition of the contract with Ajax Co.

that it will delegate its responsibility of manufacturing the required amount of furniture to another local corporation since it might not be able to meet the request due to its limited manufacturing capacity. The contract was finalized and it had all the explicit conditions mentioned and in case if some ambiguous terms are found than court will rule the decision against the party who has drafted the contract.