Privity

Question 1

Definition of privity

Answer 1

Privity is a common law rule that only those who are party to a contract is able to benefit from or enforce the terms of the contract.

Question 2

Cases of unfair or unjustifiable outcomes

Answer 2

Beswick v Beswick
Dunlop v Selfridge

Question 3

Collateral Contracts

Answer 3

The court may be able to avoid the strict rule of privity by finding a second contract alongside the main agreement (Shanklin Pier v Detel)

Question 4

Restrictive covenant

Answer 4

A restrictive covenant is a contract between two landowners, one land owner promises something to another, the obligation continues (Tulk v Moxhay)

Question 5

Recover losses on behalf of third parties

Answer 5

Where a contract was carred out by a previous owner and after the property has transferred ownership, any losses resulting from the contract on behalf of the third party by the original owner (Linden Gardens Trust v Lenesta Sludge Disposal)

Question 6

What is the problem with privity?

Answer 6

only between two parties, third parties can’t sue even of the contract if for/about them

Question 7

How did the courts try to resolve the problem with privity?

Answer 7

collateral contracts
award C extra compensation
restrictive covenants
party sues on their behalf

Question 8

CRTPA 1999 s1(1)(a)

Answer 8

The third party has rights if…
s1(1)(a) where contract expressly provides the party may benefit

Question 9

CTRPA 1999 s1(1)(b)

Answer 9

The third party has rights if…
s1(1)(b) where the term of the contract purports to confer a benefit on the third party (Charity Commission v Framjee)

Question 10

What does CTRPA 1999 s1(2) state in relation to s1(1)(b)?

Answer 10

states that s1(1)(b) will not apply if on a proper construction of the contract, the parties did not intend the term to be enforceable for third parties (Nisshin Shipping)

Question 11

CRTPA 1999 s1(2)

Answer 11

If there is something in the contract which restricts or limits the third party from being able to make a claim, then the courts must implement it`

Question 12

CRTPA 1999 S1(3)

Answer 12

The third party who is making a claim must be named through name, class or description

Question 13

Section 2 of the CRTPA 1999

Answer 13

Where a benefit has been conferred onto the third parties, the contracting parties may not rescind the contract, vary the contract in such a way that will extinguish or alter the third parties rights if:
1. The third party has accepted that the benefit is given to them
2. The contracting parties are aware that the third party has enforced the term
3. The contracting parties can reasonably foresee that the third party will enforce the term