Privity [Contract Law]

Question 1

What is the Strict Rule on Privity

Answer 1

That ‘only those who are parties ot the contract are bound by it and can benefit from it or sue on it’. The leasing precedent for this is Dunlop v Selfridge.

Question 2

What are the 2 cases ruling against the Strict Rule?

Answer 2

• Jackson v Horizon Holidays: ruled members of a family were parties to the contract
• Linden Gardens v Lenesta Sludge: extended this to not just familes

Question 3

What Act of Parliament provides the Stautory Exemptions?

Answer 3

The Contracts (Rights of Third Parties) Act 1999

Question 4

What are the three statutory exemptions?

Answer 4

• s1(1)(a): if the contract specifically mentions that a third party should have the right to enforce the contract
• s1(1)(b): if the contract attempts to give a third party some sort of a benefit
• s1(1)(3): if a person is named in the contract or belongs to a particular description

Question 5

What is the first Common Law exception? (C)

Answer 5

Collateral Contracts:

The courts may ignore the strict rule of privity if they find a collateral contract to be running alongside a bigger agreement, providing consideration for it

Shanklin Pier v Detel Products

Question 6

What is the second Common Law exemption? (A)

Answer 6

Agent:

If an agent has made a contract on behalf of a principle, then the principle and the agent will be seen as one.

The Eurymedon

Question 7

What is the third Common Law exception? (R)

Answer 7

Restrictive Covenant:

Relates to land law and is a rule that runs with a piece of land. Although it was only the original buyer who agreed to this contract, all subsequent buyers are bound by it.

Tulk v Moxhay