Contract Law - Privity

Question 1

Define Privity

Answer 1

A relationship between two parties that is recognised by the law

Question 2

What is the rule of Privity ?

Answer 2

Only those who are parties to the contract are bound by it and can benefit from it or can sue on it

Question 3

Give cases to illustrate this

Answer 3

Dunlop V Selfridge
Held: Dunlop lost their case, there was no contract between them and Selfridge

POL: Only parties to a contract can sue on it

Beswick v Beswick
Held: She had no privity. In effect, she was a 3rd part so couldn’t benefit nor enforce the contract

Question 4

What case shows the relationship between privity and consideration ?

Answer 4

Tweddle V Atkinson
comment: It was seen as unfair because it was clear that the contract between the fathers showed an agreement that the newlyweds should benefit and son was just trying to ensure this

Because of this potential unfairness there are special cases where they’ve ignored the rule

Question 5

Give cases to support the above

Answer 5

Jackson V Horizon Holidays Ltd illustrates that people who are not parties to the contract can sue to recover loss

Question 6

What case is contrasted with the above

Answer 6

Woodar v Wimpey
Held: He could not do this; the 3rd party was not a party to the contract. The judges said that the Jackson case was specific to families

Question 7

The courts change their mind again, in what case?

Answer 7

Linden Garden V Lenesta

The facts are similar to the Wimpey case above but in this case the original party to the contract could recover the loss to the 3rd party

Question 8

What are the 4 exceptions to the rule ?

Answer 8

C - collateral contracts
A - Agency
R - Restrictive covenants
S - Statutory exceptions

Question 9

What are collateral contracts and support with a case ?

Answer 9

A collateral contract is a second contract that runs alongside the main agreement

Shanklin Pier Ltd V Detel products
Held: SP won the case because courts decided that there was a 2nd collateral contract

Question 10

What is Agency

Answer 10

Agency is where you authorise someone to make a contract on your behalf.
If there is a disagreement, the principle and the agent are seen as one even though you didn’t make the contract

Question 11

What is restrictive covenants ? Support with case

Answer 11

These relate to the land law. A covenant is a legal promise and a restrictive covenant is a promise which restricts the use of the land in some way.

It is the original buyer who agreed to this term so all subsequent buyers are not strictly parties to the initial contract but are bound.

Tulk V Moxhay
Held: Tulk could stop Moxhay from building on the land even though there wasn’t a direct contract between them because the RC ‘ran with the land’ and M was bound by it

Question 12

What are the statutory exceptions ?

Answer 12

Married women’s property act - gives married women a right to property even though the house is in the husband’s name only

Road Traffic Act - Which gives a 3rd party the rights enforce an insurance policy (you just have this by law)

Question 13

what is the Contracts Act 1999

Answer 13

This act gives someone who is not a a party to a contract the right to enforce the contract made by the parties (sue them)

This is restricted to:
1. someone who is named in the contract or belongs to a particular description , i.e. unborn baby

2. The contract says this person can enforce the contract
3. The contracts intends that this person will benefit in some way S.1(1)(B)

P.s last two are considered using objective tests, this act did not get rid of the doctrine of privity