Contract/Obligations Law
The Principle of Contractual Relativity
This summary explains the scope of the principle that contractual effects are generally confined to the contracting parties and how those effects may extend to heirs, specific transferees, or third parties. It highlights practical exceptions and procedural limits that prevent or permit transfer of contractual rights and obligations.
Updated: 10 September 2023
Prepared and reviewed by: Ashraf Al-Khawaja
Contract Effects and Universal Successors (Heirs)
The general rule is that contractual effects bind only the parties, but Jordanian law recognizes that such effects may pass to universal successors (heirs) upon a party’s death. In practice, monetary rights already vested before death accrue to the estate and thus to heirs, whereas personal rights tied to the deceased’s person (e.g., guardianship) do not transfer. Procedurally, estate administrators and interested parties should review the deceased’s contracts to identify vested rights and obligations subject to estate settlement and inheritance rules.
Limits and Exceptions to Transfer to Heirs
Transfer of contractual effects to heirs is not absolute. It can be negated by express agreement between the parties, by the personal nature of the contract (where performance depends on the identity of a party), or by a statutory provision that terminates certain contracts upon death. In practice, this calls for clear contractual drafting on post-death effects and attention to sectoral laws that may automatically end agencies, employment relationships, or other personal contracts upon a party’s death.
Transfer to Specific Transferees
Contractual effects may pass to a specific transferee (e.g., a buyer or designated legatee) when the right in question is tied to the transferred thing and three core conditions are met: the contract predates the transfer, the effects are accessory to that thing, and the transferee knew of those effects at the time of transfer. Practically, this underscores the importance of due diligence and evidencing transferee knowledge to avoid imposing unexpected obligations; timing and modalities of title transfer determine when the effects shift.
Effects Toward Third Parties: Undertaking and Stipulation for Third-Party Benefit
Generally a contract does not impose obligations on third parties but may grant them rights in two practical mechanisms: undertaking for another and stipulation for the benefit of a third party. Under an undertaking, the third party is not bound unless they accept; if they refuse, the promisor must compensate the contracting party or perform the obligation himself. Under a stipulation for a third-party beneficiary, the beneficiary acquires a direct right that they may accept and enforce provided conditions are met (contract made in the stipulator’s name and the stipulator’s personal interest). Procedurally, clarity is needed on the timing of beneficiary acceptance, revocation rights, and effects on successors.
Legal notice
Notice: The content provided is for general educational purposes and is based on the original source linked on the page. This summary does not substitute for statutory texts, implementing regulations, or tailored legal advice. Verify the official texts, amendments and relevant dates, and consult a licensed attorney for advice specific to your situation.
Sources and references
Verify the official text and latest amendments before relying on this material professionally.