Monday, February 11, 2019
When death arrives, must the estate attempt to channel the decedent's skills and complete any remaining contractual duties? The outcome does not always hinge solely on whether the remaining duties are personal services. Instead, the intent of the parties is paramount. Court disagree whether boilerplate, such as clauses that the contract is "binding on successors or assigns," or is "binding on heirs, executors, and administrators," reflects the intent of the parties and cause personal service contracts to survive a party's death.
Attorneys may confront this issue when drafting contracts, reviewing contracts in connection with estate planning advising the personal representative, dealing with the surviving contract party, or seeking guidance from the probate court on the estate's responsibilities. Parties have litigated an estate's duty to complete building, farming, leasing, and many other types of contracts. If a personal representative caused an estate to complete a decedent's contract when the estate had no obligation to do so, and carried on the decedent's business without proper authorization, the personal representative could incur personal liability for any losses. In re Burke's Estate, 244 P. 340, 341 (Cal. 1926); see generally Bogart's Trusts and Trustee § 571 (regarding the continuation of a decedent's business).
See William A. Drennan, Can Boilerplate Raise Contracts of the Dead from the Grave, Property & Probate Magazine, Vol. 33, No. 1, January/February 2019.