Privity Of Contract Flashcards
What is the rule of Privity of Contract?
A contract can only be enforced by and against the parties to the contract.
(Dunlop v Selfridge, Beswick v Beswick)
What is required for both parties in a contract?
Both parties must give consideration.
(Tweddle v Atkinson)
What does Section 1(1) of the Contracts (Rights of Third Parties) Act 1999 state?
It gives a third party the right to enforce the contract in two circumstances: (a) if the contract expressly states this right, or (b) if the contract confers a benefit to the third party.
What is required for a third party to be identified under S1(1)(3)?
The third party must be identified by name, as a member of a class, or by a particular description.
What happens if a third party is not identified in the contract?
The Contracts (Rights of Third Parties) Act will not be available.
What does S1(2) state regarding third parties?
A third party cannot enforce S1(1)(b) if the parties did not intend them to.
(Prudential v Ayers)
What does S2 state about third party rights?
Where a third party has a right under S1, the parties to the contract may not manipulate the contract to prevent the third party from enforcing it.
What does Section 3 allow regarding third parties?
It allows a contracting party to have a defense against the third party.
What is an example of the application of the rule of privity?
Under the rule of privity, there is no privity of contract between C and X. However, under the statute law exception, C can enforce his third party rights against X because it was intended that a benefit should be conferred to him.
What is the conclusion under statute law regarding third party rights?
X will/will not be able to enforce his third party rights.
What are ‘special case’ exceptions to the rule of privity?
Case law provides exceptions where the rule of privity will not apply.
What is a collateral contract?
A collateral contract can be a subcontract where a contracting party insists on it, allowing rights over a non-contracting party.
Example: In Shanklin Pier v Detel, C can enforce rights against X due to a collateral contract.
What is a restrictive covenant?
A restrictive covenant can bind subsequent purchasers and run with the land, as seen in Tulk v Moxhay.
Example: C can enforce a covenant against X not to build on land, even though X is a non-contracting party.
What is an agency agreement?
In an agency agreement, an agent can make a contract on behalf of a client, allowing the client to enforce rights under that contract.
Example: C can enforce rights against X due to an agency agreement, despite being a non-contracting party.
What happens when a contract is made on behalf of a family?
When a contract is made by one person on behalf of the whole family, each family member can enforce their rights under that contract.
Example: In Jackson v Horizon Holidays, C can enforce rights against X as the contract was made on behalf of the family.
What is the conclusion regarding third party rights under common law?
Under common law, X will/will not be able to enforce his third party rights.
