Privity

Question 1

Privity

Answer 1

Only those who are parties to a contract are bound by it and can benifit from jt

Question 2

Basic rules

Answer 2

Third parties cannot sue nor be sued under a contract, even if they have an interest in its performance (Dunlop v selfridge) (beswick v beswick) this can leave parties without justice (tweddle v Atkinson) - even though named in the contract he could still not claim.
Rule of privity is based on the rule that consideration must move from the promisee, but this rule is seen as injustice and the courts have tried to find a way of avoiding the rules (Jackson v horizon holidays)

Question 3

General exceptions

Answer 3

Agency - when one person, the agent, is authorised to make a contract on behalf of another person, the principle.
Collateral contracts - the court may be able to avoid the strict rule of privity by finding a second contract alongside the main agreement (shanklin peir v detel)
Restrictive covenants - in English land law, if a purchaser of land promises the seller in his contract for the purpose of the land that he will not do something on the land, then this is a restrictive covenant. The promise runs with the land (Tulk v moxhay)

Question 4

The contracts (rights go third parties) Act 1999

Answer 4

This act allows someone who is not party to a contract to enforce the contract to either or both parties to if it:
The third party is expressly identified by name
The contract expressly provides the third party may enforce the contract, or
The contract term is an attempt to confer the benefit of the term on the third party
N.B. The parties to the contract have the right to exclude the act from benefiting a third party. Most commercial contracts now include such a term, so the act is not as useful as hoped. However in consumer contracts there are often rights where goods are bought for someone else such as when a gift recipes is obtained.