Contract Law - Privity of Contract Flashcards
In Privity
Parties to the contract
Contracts (Rights of Third Parties) Act 1999
Allows for non-parties to a contract to sue to enforce their rights if the contract says so or if it purports to confer a benefit on them
Must be named in the contract or a member of a benefitting class of people described in contract
Doesn’t create obligations for third parties
Exclusions: employment contracts and articles of association (contracts between company and its shareholders) or if there is a clause saying it will not apply
Assignment
Assigning a benefit to someone else
Person liable to perform the obligation being transferred must be given notice
Can only transfer a benefit not a burden
Agency
Acting on someone’s behalf
Agent has entered into the contract so principal is not privy to the contract. Unless the agent acts for an undisclosed principal - then both agent and principal can be sued and sue
Subrogation
Limited to insurance and guarantees
Collateral Contract
Agreement between a party and a non-party. Parties must have intended for there to be a contract with the non-party
Implied contract is collateral to the main contract
Trust
Holding rights on trust for someone who isn’t a party
Must be possible to find that there is an irrevocable intention to benefit the third party
Variation and Recission of Contract to which third party benefits from
If a third party has rights under a contract the parties cannot change it if any of the following applies:
- The third party has communicated agreement to the term benefitting him
- Third party has placed reliance on that term and promisor aware of reliance
- Promisor should have foreseen that the third party would rely on the term and the third party has done so
Novation Agreement
Parties enter into contract to release themselves from the arrangement and for new parties to become party to it
