privity Flashcards
complete P
What is privity?
The relationship between parties of a contract. Only those who are party to the contract are bound by it and can also therefore benefit from it.
What is a third party?
A person who isn’t a party to the contract and hasn’t provided consideration for the contract, but has an interest in it’s performance.
What happened in the case of Donoghue v Stevenson? And why could Mrs Donoghue not sue?
Donoghue’s friend bought her a ginger beer, which had a decomposed snail in the bottom of the opaque bottle in which the contents of the bottle could not be seen. Donoghue could not sue as she was a third party to the contract.
What happened in the case of Dunlop Pneumatic Tyre Co v Selfridge?
Dunlop sold tyres to dealers and part of the contract was that they wouldn’t sell them below the recommended price and that the dealers keep the same agreement from whoever they sold the tyres onto. Dunlop sold tyres to Dew & Co who sold them to Selfridges. Selfridges then sold the tyres for below the recommended price.
What happened in the case of Tweddle v Atkinson?
Tweddle and Guy agreed that when their children married they would each pay the son/son-in-law a sum of money. Tweddle paid his son but died shortly after and Guy died before he could pay the money. Tweddle Jnr sued the executor of Mr Guy’s estate.
What are the 4 exceptions to the strict rule of privity?
Agency
Collateral contracts
Restrictive covenants
Holiday cases
What is agency?
This allows a person to authorise another to make contracts on their behalf. For example a footballer will use an agent to negotiate employment and sponsorship contracts.
What are collateral contracts? What case example shows this?
When courts find a second contract alongside the main agreement - Shanklin Pier v Detel products
What is restrictive covenants? What case example shows this?
A covenant is an agreement, and often when land is brought there is a clause in the deeds that restricts a person doing something - Tulk v Moxhay
Why are holiday cases an exception to the strict rule of privity? What case is an example of its exception?
When a parent/gaurdian books a holiday if a member of the family faces a disaster in which the normal privity rule wouldn’t allow them to sue, this exception would allow this - Jackson v Horizon holidays
What happened in the case of Beswick v Beswick?
Mrs Beswick’s husband sold his business to his nephew in return for an annual allowance to be paid to himself and after his death, to Mrs Beswick. Once Mr Beswick died the nephew refused to make the payments.
What are the three statutory exceptions to the strict of privity?
-Law of property act allows assignment (transfer) of life policies eg. cover mortgage debt
-The married women’s property act 1882 allows a spouse to sue as a direct party upon the life police of their deceased wife/husband
-The road traffic act 1930, as updated, allows a victim of physical injury to sue the insurance company directly and to recover from the policy between the driver and the insurer
Legislative reform- what are the two main aspects to the rule of privity?
-That the 3rd party cannot be made the subject of a burden imposed by the contract
-A 3rd party cannot enforce a benefit purported to be granted by the contract
What impact has the Contracts (Rights of Third Parties) Act 1999 had on the rule of privity?
The privity rule only has very limited applications now - the act enables 3rd parties to enforce contractual terms in certain circumstances
Under the Contracts (Rights of Third Parties) Act 1999 s.1(1)(a) an s.1(1)(b) state? Give case examples:
s.1(1)(a)-The contract expressly provides that they may do so: Tweddle v Atkinson
s.1(1)(b)-The contract purports to confer a benefit upon them, unless it is clear that the terms was not intended to be enforceable, by the 3rd party: Nisshin Shipping v Cleaves
