Privity of Contract

Question 1

Common Law

Answer 1

• Only a party to a contract can sue on it.
• 3rd party may not sue for the benefit.
• Obligation may not be imposed on a 3rd party.

Question 2

Contract and Commercial Law Act 2017 purpose

Answer 2

Allows third parties to enforce contracts if the contract benefits them and they are clearly identified, unless the contract specifies otherwise.

Question 3

Contract and Commercial Law Act 2017

Answer 3

• Includes a promise in contract.
• Confers benefit on a third party; and
• Third party is designated by name, description, or reference to class; then
• Third party can sue for the performance of the contract; unless
• There is provision in contract to contrary

Question 4

Promise in contract

Answer 4

If the contract includes a promise intended to benefit a third party, this promise can become enforceable even if not directly part of the contract.

Question 5

Confers a benefit on a third party

Answer 5

If the contract confers a benefit on someone outside of the contracting parties, that third party may have rights under that agreement.

Question 6

Third party description

Answer 6

The third party must be clearly designated in the contract by name, description or by reference to class to ensure the third party benefiting is identifiable.

Question 7

Third party can sue for performance

Answer 7

The third party can sue for performance if clearly designated and a benefit is conferred on them, they can sue for the performance of the contract to ensure they receive the benefit promised.

Question 8

Provision

Answer 8

However, if the contract includes a provision to the contrary, then the third party cannot sue for performance.