Privity Flashcards
What is Privity?
Privity is a relationship between two parties that is recognised by the law.
What is the main rule of Privity and which case was this established in?
Dunlop tyres V Selfridge- Decided that only those who are parties to a contract can act on it and can be sued/sue on it.
What was the rule established in Beswick V Beswick?
Beswick V Beswick- Decided that just because a third party is mentioned they cannot enforce the contract or benefit from it.
What is the relationship between privity and consideration?
Can seem unfair as it prevents people who are mentioned in the contract and who are meant to benefit from it from doing so. Twedle V Atkinson
Which cases show that the courts have tried to ignore the privity rule so that its fair on the parties?
- Jackson V Horizon holidays, Sued for the entire families loss even though only father had the contract. He won as they claimed it would be unfair if only one was compensated.
(CONTRADICTS)
-Woodar V Wimpey, Sued for the breach of contract and to the loss of the third party. He lost as third party not part of the contract.
- Linden gardens V Lenesta sludge, They could recover loss to the third party.
Shows the courts have no clear way forward when clarifying the law.
What are the 4 exceptions to the rule?
Collateral contracts
Agency
Restrictive covenants
Statutory exceptions
What is a collateral contract and the case which established this?
A collateral contract is a second contract which runs alongside the main agreement.
- Shanklin pier V Detel products, D was not part of the contract so under the rule of privity S shouldn’t be able to sue. Won as courts decided the contact between SP and the painter included the contract between SP and D.
What is an agency?
Where you authorise someone to make a contract on your behalf.
If there is a disagreement you are seen as one person, so they are able to enforce the contract.
What are restrictive covenants and what case established this?
These relate to land laws only, and is a covenant which restricts the use of the land is some way. This covenant ‘runs with the land’ every time it is sold.
-Tulk V Moxhay, Land had been sold twice since the restrictive covenant had been placed on the land. Original owner could still stop them building on the land as RC runs with the land.
What are the three statutory exceptions?
A) Married women’s property act- give married people a right to property.
B) Road traffic act- Gives a third party the right to enforce insurance policy.
C) Contracts (right of third party) acts
What is the contracts (right of third party) acts?
Act gives someone who is not a party to the contracts the right to enforce it.
Its restricted to:
- Someone who is named in the contract and the contract says they can enforce it.
- Contract intends that this person will benefit in someway.
What is the test use to decide whether the contracts act will be enforced?
‘What would reasonable contracting parties have thought the relevant terms of the contact meant’
- Looks at what would reasonable people understand to be the agreement.
What is the evaluation of privity?
- Seems unfair when people are not able to enforce a contract, even when they should benefit from it.
- Contracts act has made it easier for a third party to enforce a contract.
