Final answer:
The contract that ends with the death of the principal is a power of attorney. This authorization allows an agent to act on the principal's behalf, but it terminates when the principal dies, making it an important aspect of estate planning.
Step-by-step explanation:
The type of contract that terminates upon the death of the principal is known as a power of attorney. A power of attorney is an authorization to act on someone else's behalf in legal or business matters. The person granting the authority is known as the principal, and the person who is authorized to act is known as the agent or attorney-in-fact. When the principal passes away, the power of attorney automatically ends, as the agent's authority to act is contingent upon the principal's ability to grant that authority.
There are different types of power of attorney, such as durable and non-durable. A durable power of attorney remains in effect even if the principal becomes incapacitated, but it still terminates upon the principal's death. This is a crucial point, as it affects estate planning and the management of the principal's affairs after their death.
Understanding when a power of attorney ends is important for estate planning and ensuring that the principal's wishes are carried out as intended. Anyone considering granting a power of attorney should consult with a lawyer to understand the implications fully.