Privity of contract

Question 1

Privity definition

Answer 1

Only those who are parties to the contract can be bind by it and benefit from it

Question 2

A01 - Privity

Answer 2

• Third parties cannot sue or be sued even if they are named within the contract ( Beswick v Beswick) (Tweddle v Atkinson)
• The rule of privity is based upon the rule of consideration must move from the promisee however it is seen as unjust therefore the courts have tried to find a way to avoid it (Jackson v Horizon Holidays)

General exceptions:
-When an agent or an agency is allowed to make a contract on someones behalf
-Collateral contracts where the courts may be able to find a second contract alongside the main agreement (Detel)
-Restrictive covenants where if land is bought with the promise of a certain purpose of the land then that rule must follow with the land (Tulk v Moxhay)

The contracts (rights for the third parties) Act 1999:
- This Act allows a third party to enforce the contract against either one or both the parties to it if:
>The third party is identified by name
>The contract states the third party is able to enforce the contract
> The contract term is is an attempt to confer the benefit of the term on the third party
-The parties to the contract have the right to exclude the Act from benefiting a third party
- Popular in consumer contracts which is why gift receipts exist