formation- privity of contract Flashcards
what is general rule in privity of contract
generally only those who are parties to a contract are bound by it and can benefit from it, anyone outside contract cannot claim
case on general rule of privity
Tweddle v Atkinson
Tweddle v Atkinson facts
- 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
act that reformed rules on privity
contracts (right of third parties) act 1999
what does the contracts (right of third parties) act 1999 provide
a statutory exemption to the common law doctrine of privity
what does the act allow
a person who is not a party to a contract to enforce a term of that contract provided…
what does s.1(1)(a) of the act need for it to be enforced
for the contract to expressly states that the party may do so
s.1(1)(b)
term clearly benefits on the 3rd party
s.1(3)
third party must be expressly identified in the contract by name, or described as a member of a particular class
when does s.1(1)(b) not apply, what section is this
if it appears the parties did not intend the term to be enforceable by a third party: s.1(2).
case for the act
Nisshin shipping co v cleaves
Nisshin shipping co v cleaves facts
- 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
4 common law exceptions to privity rule
holiday clauses, agency, trust and collateral contract
explain holiday clauses
- 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
case for holiday clauses
Jackson v Horizon Holidays
Jackson v Horizon Holidays facts
- 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
explain agency common law exception
- 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
explain common law exception trusts
a trust exists to benefit a third party
explain common law exception collateral contract
this is a separate contract which runs alongside the main contract and can involve a third party to the main contract.
case for collateral contract
Shanklin Pier v Detel Products
Shanklin Pier v Detel Products facts
- 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
