Privity of contract

Question 1

what is the purpose of the doctrine of privity?

Answer 1

a person who is not a party to a contract cannot sue on that contract or be sued on that contract

Question 2

what are the cases that established and then confirmed the doctrine?

Answer 2

Tweddle v Atkinson (1861) and confirmed by HoL in Dunlop Rubber v Selfridge (1915)

Question 3

what are the exceptions to the doctrine of privity?

Answer 3

claiming damages on behalf of the third party, assignment, collateral contracts, statutory exceptions, negligence

Question 4

when can someone claim damages on behalf of a third party?

Answer 4

for group contracts in social contexts (holidays) or construction contracts where a subsequent purchaser is envisaged - the defects become apparent after being sold and under doctrine of privity the third party wouldn’t be able to sue the original contractor, so there is an exception for this

Question 5

what might a contracting party be able to do if a breach causes no loss to them but does to a third party?

Answer 5

might ask the court for an order of specific performance which would have the effect of obtaining performance of the contract on behalf of the third party

Question 6

how does assignment work?

Answer 6

the owner of property or a right of action transfers their interest to another person

Question 7

what are collateral contracts?

Answer 7

exist alongside the main contract and in certain circumstances allow someone who is not a party to the main contract to take action when they sustain a loss caused by a breach of the main contract. a collateral contract can be implied by the courts

Question 8

what are some statutory exceptions?

Answer 8

Married Women’s Property Act 1882

Road Traffic Act 1988

Question 9

how can a third party claim through negligence?

Answer 9

can use negligence to recover what they lost because the contract was not properly performed

Question 10

what act gives third parties rights if they meet certain requirements?

Answer 10

The Contracts (Rights of Third Parties) Act 1999

Question 11

how does a third party gain rights under the 1999 act

Answer 11

if the contract provides he can or the contract purports to confer and benefit him unless it appears that the parties did not intend to do so 
the third party must be expressly identified in the contract by name, as a member of a class or answering particular description

Question 12

if a third party satisfies the requirements in the act what can they do?

Answer 12

enforce the contract, obtain any remedy available to a party of the contract, make use of any of the exemption clauses available to a party of the contract

Question 13

how does s2 of the act deal with the contracting parties being able to alter/amend the contract and destroy the third parties rights?

Answer 13

the contracting parties can expressly reserve the right to change the contract without reference to the party. if they haven’t done this then in certain circumstances they may no longer be able to amend or vary the contract in a way that affects the third party’s rights without their consent

Question 14

what happens if the third party has relied on the terms of the contract and the contracting party knows this?

Answer 14

the contracting parties will be unable to take the rights away unless the third-party consents

Question 15

can parties to a contract exclude the provisions of the act?

Answer 15

yes