Privity of contract Flashcards
What is privity of contract?
At common law, a contract creates rights and obligations only between the parties to it. A contract does not confer enforceable rights on a third party to the contract nor does it impose obligations on a third party.
What are the exceptions to privity of contract?
- Agency
- Assignment
- Collaterol contract
- Tort
- Judicial attempts
- Trusts created by contract
What is the agency exception to the rule that a contract does not confer enforceable rights on a third party?
If an agent enters into a contract with Party A on their principal’s behalf, it is as if the contract were made between the principal and Party A.
What is the collateral contract exception?
A collateral contract can exist between the promisor and a third party.
What is the assignment exception in contract law?
If A is under a contractual obligation to B and B assigns their contractual rights to C
What are the requirements for an assignment to be valid?
The assignment must be permitted, in writing and final
Can third parties be owed a duty of care in tort if a breach of contract occurs?
Yes, other people can be owed a duty of care if a breach of contract amounts to a breach.
What is an example of judicial attempts to avoid the doctrine that a contract does not confer enforceable rights on a third party?
Where a contracting party has suffered no loss but a related third party has
What are the remedies available for third parties in contract law?
- Damages
- Specific performance
- Injunction
Are damages generally available in respect of a third party’s loss?
No, except for contracts of convenience and the St Martins Property exception.
What is a contract of convenience in the context of third-party rights?
A contract where one person enters into an agreement on his own behalf but also on behalf of another, such as family holidays or hiring a taxi for a group.
What is the St Martins Property exception?
Where a landlord has work done to their house and both parties know it will be transferred to someone else, the original party who entered into the contract can sue.
When is specific performance available as a remedy for third parties?
If the promisee is willing to enforce its rights.
What does the Contract (Rights of Third Parties) Act allow?
It allows third parties to enforce terms but not for a contract to be enforced against them.
Under the Contract (Rights of Third Parties) Act when can a third party enforce a term of the contract?
If the contract specifically provides that the third party can enforce a term or if the agreement purported to confer a benefit on to the 3P.
It must also not be the case that the parties did not intend the contract to be enforceable by a 3P.
What presumption is created if a contract purports to confer a benefit on a third party?
A rebuttable presumption is created that the contract is enforceable by third parties.
Can contracting parties rescind a contract to alter third-party rights without their consent?
No, unless there is a term that allows them to do so
