formation- privity of contract

Question 1

what is general rule in privity of contract

Answer 1

generally only those who are parties to a contract are bound by it and can benefit from it, anyone outside contract cannot claim

Question 2

case on general rule of privity

Answer 2

Tweddle v Atkinson

Question 3

Tweddle v Atkinson facts

Answer 3

• 2 fathers made agreement to give their soon to be married children money as a wedding gift
• 1 father died and his executor refused to pay
• although promise had been made for the couple’s benefit, they had no right to enforce it bc they had not given any consideration or part of the contract

Question 4

act that reformed rules on privity

Answer 4

contracts (right of third parties) act 1999

Question 5

what does the contracts (right of third parties) act 1999 provide

Answer 5

a statutory exemption to the common law doctrine of privity

Question 6

what does the act allow

Answer 6

a person who is not a party to a contract to enforce a term of that contract provided…

Question 7

what does s.1(1)(a) of the act need for it to be enforced

Answer 7

for the contract to expressly states that the party may do so

Question 8

s.1(1)(b)

Answer 8

term clearly benefits on the 3rd party

Question 9

s.1(3)

Answer 9

third party must be expressly identified in the contract by name, or described as a member of a particular class

Question 10

when does s.1(1)(b) not apply, what section is this

Answer 10

if it appears the parties did not intend the term to be enforceable by a third party: s.1(2).

Question 11

case for the act

Answer 11

Nisshin shipping co v cleaves

Question 12

Nisshin shipping co v cleaves facts

Answer 12

• contract included requirement to pay 3rd party commission
• court had to decide whether 3rd party could enforce payment
• unable to show they did not intend term to be enforceable, so 3rd party could enforce commission clause

Question 13

4 common law exceptions to privity rule

Answer 13

holiday clauses, agency, trust and collateral contract

Question 14

explain holiday clauses

Answer 14

• purpose of holiday is for relaxation
• so if a parent books a holiday on behalf of their family they can claim on behalf of them for a breach of contract

Question 15

case for holiday clauses

Answer 15

Jackson v Horizon Holidays

Question 16

Jackson v Horizon Holidays facts

Answer 16

• bought him and his family a holiday
• holiday company refused to pay compensation
• court decided it would be unfair to limit award of damages to the dad
• damages awarded should reflect all the members of the holiday party had suffered

Question 17

explain agency common law exception

Answer 17

• one person (agent) is authorised to make a contract on behalf of another person (the principal)
• the effects is that the principal will be bound by the terms of the contract even though they did not make the contract themselves

Question 18

explain common law exception trusts

Answer 18

a trust exists to benefit a third party

Question 20

explain common law exception collateral contract

Answer 20

this is a separate contract which runs alongside the main contract and can involve a third party to the main contract.

Question 21

case for collateral contract

Answer 21

Shanklin Pier v Detel Products

Question 22

Shanklin Pier v Detel Products facts

Answer 22

• contract between pier and painters
  -painters to use detel paint, told it would last 7 years
  -lasted 3 months
  -collateral contract between pier and detail
  detel promised 7 years, so pier instructed painters to use them