Privity Of Contract Flashcards
What is privity of contract
A doctrine of contract law that states that contracts should not give rights or obligations To entities other than those who are parties to the contract
What act links to privity of contract (rights of third parties)
Contracts(rights of third parties) act 1999
What is the basic rule of privity of contract
If you are not party to the contract, you can neither sue nor be sued under its terms
What happen in Dunlop Pneumatic Tyre v Selfridge (1915)
Dew & Co has acquired tyres from the Dunlop at a discount, but subject to not reselling below a certain min price. Dew sold them to Selfridges who agreed to uphold the Dunlop restriction on price. S did however sell the tyres at a reduced price and Dunlop brought an action in breach of contract
Held for Dunlop Pneumatic Tyre v Selfridge (1915)
Held that Dunlop were a stranger to the contract between Dew& Selfridges and this could not rely on it
What is consideration maxim
‘Consideration must move from the promisee’
Case link to consideration maxim
Tweddle v Atkinson 1861
Facts of Tweddle v Atkinson 1861
Fathers of the bride and groom contracted with each other for each to pay some to the groom. The contract had a clause that allowed the groom to sue each party for their sum. Father of the bride did not pay the sum and the groom sued him
Held for Tweddle v Atkinson 1861
Groom’s claim failed as consideration did not move from him. The approach to privity characterises it as an extension of the doctrine of consideration
Facts of Beswick v Beswick 1967
Mr B made a contract with his nephew to sell his coal merchant’s business in exchange for weekly payments due to the uncle for life and after his death to his wife and the nephew’s aunt. After uncle’ death the nephew refused to pay the aunt.
Held for Beswick v Beswick 1967
No privity of contract. No breach
Facts of Jackson v Horizon 1975
Mr J booked a holiday for himself and his family. The holiday was very disappointing. He sued for damages for himself and his family
Held for Jackson v Horizon 1975
Damages were awarded to both mr J and his family despite the family having privity. Judges ratio cited the fact the holiday impacted all of the family
What is expectations to the privity rule
The contract (rights of third party) act 1999
What does the statue of contract act 1999
Allows third party to enforce contractual rights
If the third party is named as part of the contract and express terms what is allowed
Allowing third parties to enforce the contract or the contract intends to confer a benefits on a third party
Evaluation of rights of third party act 1999
An at allows contracting parties to exclude the act from benefiting a third party. Useful in protecting 3rd party rights
What is stated s.1(1) in right to third party to enforce contractual
Subject to the provisions of this act, a person who is not party to a contract may in his own right enforce a term of the contract if…
What is stated s.1(1)(A)(B)in right to third party to enforce contractual
The contract expressly provides that he may or…
Subject to subsection(2), the term purports to confer a benefit on him
What is stated s.2 subs(1b) in right to third party to enforce contractual
Does not apply if on a proper construction of the construction of the it appears that the parties did not intend the term to be enforceable by the third party
What does an act provides in some circumstances
Will be possible third parties to enforce contractual terms but strictly only applies where
Where does the act strictly only apply
- Contract seeks to infer a benefit on the third party
- This was the intention of the parties and;
- Contract clearly references the third party by name or a member of A particular category
What are general exceptions to the basic rule
Agency, collateral contracts and restrictive covenants
What is agency
It is someone who authorised to contract in behalf of party
If person is granted agency what happen
Granting agency is bound by contracts made by the agent despite not being directly involved
What are collateral contracts
It is a second contract, may induce a person to enter into a main contract, depends upon the main contract for its existence
What can courts avoid with collateral contract
Avoid rules of privity in these circumstances
Case link of collateral contracts
Shanklin pier V detel products 1951
Facts of Shanklin pier v Detel products 1951
Pier company employed painters to paint the pier. Painters bought ain’t from detel who informed the company that the paint would last for 7 years. it lasted for 3 months
Held for Shanklin pier v Detel products 1951
Detel has a ‘ collateral’ contract with the pier company despite the painters buying the paint as the purchases relied upon the promise of 7 years
What is restrictive covenant
Prevent landowners from something on the land. All present and future purchasers of property bound by the covenant
Example of restrictive covenant
Not using the premises as a site for business operation
Case link of restrictive covenant
Tulk v moxhay 1848
Facts of tulk v moxhay 1848
T sold the garden in Leicester Square, London to elms. E sold the land to M who intend to build on it
Held for tulk v moxhay 1848
T was able to sue M despite have no privity. Covenants run with the land
