Privity Flashcards
Murdock and Hunt (definition of privity)
privity is a relationship between the parties to a contract which ensures the contract cannot impose liability on a stranger
Tweedle v Atkinson
established the principle of privity
son could not enforce a contract entered into betwen himself and his father against his soon-to-be father in law
Murphy v Bower
established privity in Ireland
plaintiffs were working for a railway company - the company employed the defendant to issue certs and payment on completionof workers tasks. plaintiffs sued for certs not being issued.
could not enforce - P was a stranger to the contract between D and the company
Monahen CJ (commentary)
no one can maintain an action who is not party ot a contract
Mackey v Jones
Harshness of the priniple
uncle of boy promised mother if boy worked on farm for him, he
would leave him farm in will – gave to third party – boy sued – held couldn’t sue as he was not privy to the contract
Tomlinson v Gill
Exceptions - contractual trusts
The defendant promised the widow he’d settle debts if she made him the estate’s administrator, failed to do so, and the court made the widow trustee, letting creditors enforce payment through a trust.
Cadbury Ireland v Kerry Co Op
Exceptions - contractual trusts
creamery acquired on the terms milk to Cadbury wouldn’t be cut off – Cadbury not party to this – creamy reduced supply – Cadbury
tried to rely on contract
HELD: they could not – there was an intention to benefit a third party (the public interest) but not specifically Cadbury – therefore there was no intention to create a trust for Cadburys
Drimmie v Davies
Exceptions - contractual trusts
father and son opened dental practice on agreement after father died, son would become sole owner provided he maintain his siblings and mother. When father died – siblings sought to enforce promise when brother was not going to honour.
HELD: Side-stepped privity – trust found where siblings were beneficiaries
Modern day – approach not successful in the difficulties in finding an intention to create a trust.
Midlands Silicones v Scruttons Ltd
Exceptions - Agency
third party can rely on clause in parent contract where:
1. Parent contract makes it clear the third party is to be protected by the provision
2. Parent contract also makes clear the contracting party contracts as agent for the third party
3. Contracting party has authority to act as agent
4. Consideration moving from the third party
The Eurymedon
Exceptions - agency
affirms Midlands principle
The Mahtukai
Exceptions - agency
accepted clause was effective to protect a sub-contractor against claims in tort by a consignee or cargo owner
Smith v Eric Bush
Exceptions - exemption clauses
purchaser applied to building society for mortgage – valuers conducted mortgage valuation – application form included disclaimer of liability in respect of report’s accuracy – HOL held exclusion clause was effective at common law
Woodar v Wimpey
Exceptions - tort/neglience
P vendors agreed to sell land to purchasers on set price, with a
further amount payable to third parties on completion.
Vendors alleged purchasers repudiated contract and sought damages – purchasers argued weren’t liable and if so shouldn’t be liable to third parties – HOL agreed
Shanklin Pier v Detel Products
Exceptions - collateral contracts
P hired contractors to repair and repaint pier – p’s recommended contractors use paint from defendants – contractors then got contract with defendants for paints – defendants said paint would last 7 years – turned out to be very poor – fade after a few months – The P’s sued the defendents
HELD: Collateral contract existed between the P and D – the D had promised the paint would last 7 years and on this the P compelled the contractors to buy that paint
LRC commentary - reform of privity
privity rule means ‘a third party does not have enforceable rights or obligations under the contract.’
