privity of contract Flashcards
Clark define Privity of contract as
Prevents a contract from being enforceable against someone who is not a party to it.
Friel defines Privity of contract as
Privity denies the right to a person who is not a party to a contract and therefore cannot be said to have supplied consideration from enforcing the contact.
what are the facts of tweedle v Akinson?
– P was engaged to be married to G’s daughter. In recognition of the marriage, G entered into an agreement with P’s father whereby both of them would pay the plaintiff a sum of money upon the marriage. While P was a beneficiary, he was not a party to this contract. G died, and the executors of his estate refused to pay the money. P sued for the money but was prevented from doing so by the doctrine of privity
what are the facts of McCoubray v Thompson? - Privity
Landowner wished to transfer his property in equal shares to P and D. D wanted all of the land and P agreed to this provided he was paid a sum of money. The landowner agreed that he would transfer the land to D provided this payment was made. D later refused to pay, and P sued. Court rejected this action citing privity.
what are the two exceptions to the doctrine
Trusts and Agency
discuss the exception trusts
Equitable trusts are an obvious exception where by a person who is not a party to an agreement may still benefit from that agreement – that is their purpose after all.
Tomlinson v Gill – D promised a widow that if she appointed him the administrator of her deceased’s husbands estate, he would personally settle any debts that she could not meet. He failed to honour this promise and a creditor brought an action against D. Court found that this was a trust even though no intention
discuss the exception Agency
An agent is a person who is authorised to act on behalf of another – ‘the principal.’
Adler v Dickson – An exemption clause contained in a contract of carriage between P and a shipping company excluded the latter party from liability for injuries caused by the negligence of its employees. P was injured when mounting a gangway of a ship and sued the employees of the company. The court held that the exemption clause was not available to the employees – not parties to the original contract
LRC Report 2008
- Recommended that the privity rule be reformed to allow third parties to enforce their rights under contracts made for their benefit. The rationale behind this was that it was the intention of the contracting parties to benefit the third party who would now be without redress and therefore, failing to allow this would cause injustice.
- Moreover, this rule is being put under more and more pressure by the increased ability of nimble negotiators to find ways around it. With changing technology and things like software licences, it would be much more streamlined if third party rights were recognised absent the doctrine of privity.
recovery of losses suffered by third parties
A contracting party may not be able to recover against the defendant in respect of a loss suffered by a third party where that third party has a direct cause of action against defendant
O’ Keeffe v Ryanair – Ryanair offered P free flights for life for herself and a companion as she was their one millionth customer – indeed, they even used her image for media campaigns and publicity stunts. Ryanair subsequently attempted to renege on this offer. She was entitled to sue for damages on behalf of herself and her husband.
