Privity of Contract

Question 1

General rule of privity of contract

Answer 1

-a contract between two parties cannot impose a burden on a third party and it cannot confer a benefit on a third party

Question 2

Before the contracts rights of third parties act (1999) the main two approaches were…

Answer 2

• finding another contract

- rely on remedies available to the promisee

Question 3

Shanklin pier v Detel products (1951)

Answer 3

• C wanted to paint the pier and D represented to C that it had suitable paint and that paint would last 7 yrs
• paint only lasted 3 months
• C couldn’t bring action for breach under contract of sale of goods bc paint was bought by 3rd party not D
• held C could sue D for collateral contract
• emerged from statement that paint would last for 7 yrs
• collateral unilateral contract, C accpeted by having paint bought from D
• C could sue for this contract despite privity rule

Question 4

Beswick v Beswick (1968)

Answer 4

• coal merchant retired and transferred business to nephew, J
• J promised he would retain him as consultant to business for the rest of his life/pay him weekly
• J promised he would pay money to widow after he died
• when he died J left 5 pounds at widow’s house and refused to pay her anymore
• she could do nothing as. a 3rd party
• as the widow she was able to become admin of the estate
• sued J for SP from his contract with her husband
• J has to honour the promise he made

Question 5

The promisee might not always want to help the third party and the 3rd party….

Answer 5

cannot compel them to help

Question 6

What dos the contracts (rights of third parties) act 1999 do?

Answer 6

It doesn’t abolishh the privity rule but it creates an exception

Question 7

S1 Contracts (rights of third parties) act 1999

Answer 7

-creates a right for a 3rd party to a contract created for its benefit to enforce that benefit against whichever party is the promisor as long as their ‘expressly identified’

Question 8

What must be satisfied for the enforcement rights?

Answer 8

-third party must be expressly identified
-you can only enforce a term if the contract explicitly says so or if
-

Question 9

What remedies are available to third parties?

Answer 9

-all remedies that would’ve been availble in an action of breach of contract

Question 10

What defenses are available?

Answer 10

-any defenses available if the claim was brought by the promisee

Question 11

if third party wants to rely on s2(1) of UCTA or s6, SGA to invalidate an exemption clause …

Answer 11

they can use UCTA to invalidate the clause

Question 12

if a third party wants to rely on s2(2) or s3 to invalidate an exemption clause…

Answer 12

UCTA isn’t availble
-in s7(2) of the 1999 act it says the provision can’t be used here because the third aprty is not considered a contracting party (s7(4)) and doesn’t operate on the other parties’ standard terms