Privity of Contract Flashcards
What is privity of contract
A contract cannot confer rights nor impose obligation on someone who is not a party to the contract
Only those who are parties of the contract are bound by it and can gain benefit from it
What is the main case for the definition?
Dunlop v Selfridge (1915) / Dunlop Pneumatic Tyre Co. Ltd v Selfridge Ltd (1915) - Dunlop was not a party to the contract so they were unable to sue Selfridge for selling under the agreed price
What part of Consideration is privity based of and which case?
It is based on rule 3 which is ‘Consideration must move from the promisee) - Tweedle v Atkinson
Are there exceptions to privity?
Yes, to avoid injustices there are exceptions where one person would be expected to make contract on the behalf of others, such as holidays and restaurants
What case allowed an exception for the whole family (holiday)?
Jackson v Horizon Holidays Ltd (1975) - The claims of the whole Jackson family were allowed even though, strictly, they were not parties to the contract.
What are the three common law exceptions to the privity of contract?
- Agency - An agent is authorised to make contracts on behalf of another person (the principal). Agent and principal are treated as the same person
- Collateral Damage - Privity may not apply if there is a second contract alongside the main
- Restrictive Covenants - In land law the seller is allowed to attach a restrictive covenants to the property so the buyer is restricted from doing certain things. For example, parking a caravan on the home. This becomes part of the TITLE TO THE LAND, so all subsequent purchasers are legally bound by that promise, even though they are not parties to the initial contract.
What is the main case for Collateral Damage?
Shanklin Pier Ltd v Detel Products Ltd (1951) - There was found to be collateral damage. Shanklin piers made a contract with contractors to repaint the pier. In the contract they were allowed to alter it. So the defendants paint was used which was promised to last 7 years. It did not. So even though the defendants were not in the original contract, as there was a second one along side it there was no privity so Shanklin can sue Detel
What is the main case for Restrictive Covenants?
Tulk v Moxhay (1846) - There was a restrictive covenant that stated nothing could be built on the garden. When Tulk sold to Elms this was fine. Then Elms sold to Moxhay who built on the garden. Despite Moxhay not being in the original contract, he was now a third party.
What is the main Statutory exception and what does it establish?
Contract ( Right of the Third Parties) Act 1999
A third party can enforce the contract against either or both the parties to the contract if:
- The party is expressly identified by name, or a member of a class or as answering a particular description
- The contract expressly provides that the third party may enforce the contract or,
- The contract term is an attempt to confer the benefit of the term on the third party
What case could of Statutory Exception been used in to create a better outcome?
Beswick v Beswick (1967)
