What happens to contracts when one of the
parties passes away before completion?
Simply speaking, it depends on what the contract
is for and what it says.
Practically however, the implications are
not straight forward.
I’m John Gallagher from Argon Law.
Today I want to discuss how this situation
might best be handled.
Our starting point involves firstly asking
whether there is a contract in place.
If an offer to enter into a contract has been
made and one of the parties dies, the offer
usually lapses if the offer has not, or can’t
be accepted.
If there is a valid contract, and the subject
matter concerns personal rights (like employment
contracts for example) these contracts will
naturally come to an end.
The final scenario relates those contracts
that involve the transfer of proprietary rights
– like contracts for the sale of land.
These contracts will remain on foot – meaning
they are enforceable by or against the estate.
There is often an expectation that personal
representatives will be able to immediately
perform these obligations when they arise.
In practice however, there is often a disconnect
between:
the time to do what is needed to give personal
representatives authority to act; and
critical dates for performance under the contract,
which may lapse before that authority is granted.
This potentially exposes deceased estates
to a breach scenario.
Breach of contract situations can be serious,
messy and stressful in a time that is already
very stressful for most personal representatives.
Navigating these issues requires a combination
of patience, legal expertise and good negotiation
skills.
If you would like to know more about death
during a contract, please visit our website
or give us a call.
