Privity

Question 1

[If Statute is Relevant Apply Here]

1. The Rule of Privity of Contract is…

Answer 1

[IF STATUTE IS RELEVANT]

The Rule of Privity of Contract is that a contract can only be enforced by and against the parties to the contract (Dunlop v Selfridge, Beswick v Beswick). This comes from the need for both parties to give consideration (Tweddle v Atkinson).

Question 2

2. However, there is an exception under Section 1(1) of…

This Could be Expressly Stated…

Answer 2

However, there is an exception under Section 1(1) of the Contracts (Rights of Third Parties) Act 1999. Which gives a Third Party the right to enforce the contract where it is intended they will benefit from the contract.

This could be Expressly Stated (S1(1)(a)), or Interpreted (S1(1)(b)) from the contract (Nisshin v Cleaves).

Question 3

3. S1(3) states that the third party must be…

Answer 3

S1(3) states that the third party must be identified in the contract either by name, as a member of a class, or answering a particular description. If they do not, then C(RTP) will not be available.

Question 4

4. S1(2) states that a third party cannot enforce…

Answer 4

S1(2) states that a Third Party cannot enforce S1(1)(b) if parties did not intend them to (Prudential v Ayers).

Question 5

5. S2 states that where a third party has a right under S1…

Answer 5

S2 states that where a third party has a right under S1, the parties to the contract may not manipulate the contract in any way which means the third party cannot then enforce the contract.

Question 6

6. Section 3 allows a contracting party to have…

Answer 6

Section 3 allows a contracting party to have a defence against the Third Party.

Here [eg. Under the rule of privity there is no privity of contract between C and X. However, under the statute law exception, C will be able to enforce his third party rights against X because it was intended that a benefit should be conferred to him because it was expressly stated/OR interpreted from the contract].

Question 7

7. To Conclude, Under Statute Law…

Answer 7

TO CONCLUDE UNDER STATUTE LAW [eg it was expressly stated in the contract between X and Y that Z would get the benefit of payment, and so Z can enforce the contract OR although Z is not named in the contract between X and Y, it can be implied that they will receive the benefit of payment, and so Z can enforce the contract OR as the contract between X and Y specifically stated Z was not to receive any benefit of payment, Z cannot enforce the contract.]

Question 8

**Defences: **
8a. Case LAW provides…

Answer 8

Case LAW provides other ‘special case’ exceptions where the rule of privity will not apply.

Question 9

8b. [IF RELEVANT]: There could be a collateral contract which is…

Here…

Answer 9

Here [eg. Under the rule of privity there is no privity of contract between C and X. However, under the case law exception, there is a collateral contract between them, as X insisted on a particular type of paint, so C will be able to enforce his third party rights against X even though C is a non-contracting party].

Question 10

8c. There Could be a Restrictive Covenant…

Here…

Answer 10

Here [eg. Under the rule of privity there is no privity of contract between C and X. However, under the case law exception, the restrictive covenant placed by C not to build on land, can be enforced against X even though X is a non-contracting party].

Question 11

8d. [If Relevant]: An agency agreement where an agent makes a contract with another party

Here…

Answer 11

Here [eg. Under the rule of privity there is no privity of contract between C and X. However, under the case law exception, there is an agency agreement, so C will be able to enforce his third party rights against X even though C is a non-contracting party].

Question 12

8e. [If Relevant]: Where a contract is made by one person on behalf of the whole family, as in…

Here…

Answer 12

Where a contract is made by one person on behalf of the whole family, as in Jackson v Horizon Holidays, each family member can enforce their rights under that contract.

Here [eg. Under the rule of privity there is no privity of contract between C and X. However, under the case law exception, the contract was made by X on behalf of the family, so C will be able to enforce his third party rights against X even though C is a non-contracting party].