privity - not assessed, 26/7 lecture not added Flashcards
under the common law Doctrine of Privity of Contract, it is only possible for the parties to the contract to create ___, ____ or obligations and only these parties can ___ or __ ____
benefits, rights or obligations
sue or be sued
the doctrine of privity under common law applies to ____ while statutes allow for the conferring of ____ from a contract to a third party
obligations, benefits
what are the two parts of the common law doctrine of privity
- only a party to a contract can enforce it
2. a contract cannot impose an enforceable obligation on a stranger, that is, a person that is not a party to a contract
what are the two limbs to the doctrine of privity
benefit aspect - a contract cannot confer benefits on a third party. Only an original party to a contract can sue on it. Only a party to a contract may sue on the contract - see Tweedle case
- burden aspect - a contract cannot impose restrictions or burdens on a third party. Only an original party to a contract can be sued on it - see Dunlop case
what happened in Tweedle v Atkinson
father of the bride and father of the groom talked and made an agreement to give the couple a sum of money once married, but both died before the wedding.
the groom sued the father of the bride’s estate for the rights to the sum of money he had promised, but the doctrine of privity meant the claimed failed because the groom is not a party to the agreement
what are the remedies for promisor’s breach
specific performance - see Beswick v Beswick
or common law damages:
- remedies for the loss, if any, suffered by the promise
- remedies for loss suffered by third party
what happened in Beswick v Beswick
Peter Beswick was a coal merchant and his nephew John Beswick helped in the business.
When Peter grew old, he asked John to take over the business and a solicitor drew up an agreement for them, including the term that Peter was to give the business to his nephew in consideration for John employing Peter for the rest of his life and paying a weekly £5 annuity to Mrs Beswick.
Peter died and only paid one annuity to his aunt, who sued arguing she was owed the annuity.
she was not a party to the contract so under the doctrine of privity she is not entitled to the annuity but Lord Denning disagrees.
what happened in Jackson v Horizon Holidays Ltd
Jackson pays for a travel package for him and his family. It turns out shit due to being incorrectly advertised, resulting in significant disappointment and distress for the family.
Lord Denning allowed partial recovery for Jackson’s distress and also compensation for having disappointed his family
what happened in Dunlop Pneumatic Tyre Co Ltd v Selfridge and Co Ltd
Dunlop made a contract with Dew for Dew to buy and resell Dunlop tyres with a clause that they would not sell them at that price and also that if Dew sold the tyres he had to insert a clause in the contract with the third party that they would not resell the tyre at a lower price.
Dew sells tyres to Selfridge, including the clause but Selfridge sells them at a lower price anyways.
Dunlop sues but cannot impose an obligation on Selfridge. Only Dew could sue Selfridge for breach of contract
what are some exceptions to the doctrine of privity
trusts, collateral contracts, agency, third party insurance, assignment and statutory exceptions
what is a donee
someone that receives goods as a donation
what would apply in cases of privity prior to 1982 and why
the common law, because the Contract Privity Act 1982 only came into force then
statute only deals with privity as far as where there is a ___ ____ ___ __ ___ ___ and does not contain rules relating to ____
benefit conferred onto a third party and does not contain rules relating to burden
the Contract and Commercial Law Act 2017 does not take away the existing rights of whom
the parties in the contract
a benefit to a third party is defined in what section of the Contract and Commercial Law Act 2017
S11
S12 of the Contract and Commercial Law Act 2017 is the key provision in relation to the ?
enforcement of a promise for the benefit of a third party
where the requirements under the Contract and Commercial Law Act 2017 are met, beneficiaries are able to?
sue and recover benefit and can get any rights, remedies or damages which may apply
what are the conditions of application under S12 of the Contract and Commercial Law Act 2017
- must have contract or deed
- promise must be included in a contract or deed
- must have a benefit that is defined and that benefit must be by way of an exclusion clause (in the deed or contract)
- the third party must be designated by name, description or reference to a class
what is the effect of S12 of the Contract and Commercial Law Act 2017
a promisor can promise, in a contract, to a promisee for the benefit of a beneficiary and it is possible for the designated beneficiary to enforce that benefit (legal right)
what happened in Karangahape Road International Ltd v Hollway
the nominee was not clearly given in the contract and the HC found a nominee without a name to not be satisfactory under S12 - “until nomination is made, we do not know who the nominee is”
but we have now moved onto a broader interpretation
what happened in Rattrays Wholesale Ltd v Meredyth-Young & A’Court Ltd
Rattrays subleased their supermarket to the defendant with a clause requiring goods to be bought from GUS or from a company nominated by Rattrays.
The defendant did not buy goods from GUS or the other designated entity and Rattrays sued as a party to the contract, but also on behalf of the lessor and the lessors nominee.
Tipping J found for the plaintiff - it was possible for Rattrays to sue as a lessor and the designation by name, description or reference to a class under S12 was found to be met.
It was clear enough because Rattrays was going to nominate that person (themselves) - we will know who it is at some point
there must be an intention of creating a legal obligation/right.
previous cases were held to be unduly narrow
what happened in Laidlaw v Parsonage
Laidlaw promised to sell a house to Parsonage, who were part of a family trust and became the nominee under the ASAP.
The CA confirmed the Rattrays decision and the SC further confirmed by denying leave to appeal the CA decision.
we don’t need to know exactly who they are, but the designation of nominees under S12 is a core requirement still
what is a pre-incorporation company and what is the issue with them in relation to privity
companies are created once incorporated and before that don’t exist.
pre-incorporation companies can be designated as the beneficiary prior to incorporation (like an unborn child)
can a contract be made on behalf of a company that is not yet formed/incorporated? would S12 of the Contract and Commercial Law Act 2017 apply in this situation? Where does S12 apply to pre-incorporation companies?
No - so S12 does not apply.
If a contract is made for the benefit of the company, S12 applies
S17 of the Contract and Commercial Law Act 2017 must be read in conjunction with what other section from the same act?
S12
S17 of the Contract and Commercial Law Act 2017 gives beneficiaries what right
the right to enforce a benefit against a promisor under a contract even though the beneficiary is not party to the contract. beneficiaries can claim relief, including damages, specific performance or an injunction even though they have not provided consideration in that relationship in the contract
S17 confirms who’s obligation
the promisors - they cannot just say a beneficiary is not part of a contract
what does S14 do and what does it specifically preclude
it protects the beneficiaries position by setting limits as to when the parties can vary or discharge the contract (e.g. plans made on the basis of the promise) - precludes variation or discharge without the consent of the beneficiary where the position of the beneficiary has been materially altered by his or her own or another’s reliance on the promise, or the beneficiary has obtained judgment upon the promise, or the beneficiary has obtained the award of an arbitrator upon a submission relating to the promise
