Privity of contract and rights of 3rd parties

Question 1

general rule in the doctrine of privity of contract

Answer 1

a person who is not a party to a contract cannot acquire any rights under that contract or be subject to any of its obligations

Question 2

5 common law methods of circumventing (avoiding) the doctrine of privity

Answer 2

• agency
• assignment
• collateral contract
• actions in tort
• other judicial attempts to avoid the doctrine

Question 2

Agency

Answer 2

an agency relationsship occurs when one party, the agent, is authorised either expressly or by implications, by the principal, to contract on behalf of the principal.

Question 3

Requirements necessary to establish an agency relationship

Answer 3

• principal should be named
• agent should be authorised to act as agent
• consideration must be moved from the principal

Question 4

Define a non-assignment clause within assignment exception to doctrine of privity.

Answer 4

Neither party shall be entitled to assign this Agreement or sub-contract any part of this Agreement to any person,
persons or company without the prior written consent of the other party.

Question 5

What are collateral contracts?

Answer 5

contract between the promisor and the third party, to avoid the difficulties of privity.

Question 6

What is the meaning of actions in tort as an exception to the privity doctrine? + name key case for this

Answer 6

a person who is not a party to the contract between A and B, may be owed a duty of care.

Donoghue v Stevenson
- it was held that the plaintiff, as the ultimate consumer of the goods, could bring a claim in the tort of negligence directly against the manufacturer

Question 7

A husband buys a car from a car dealer for his wife. The wife is involved in an accident because the car’s brakes were defectively installed by the manufacturer of the car. Can the wife sue the manufacturer of the car for breach of contract?

A. No. The wife should sue the car dealer for breach of contract

B. No. The wife should sue the car manufacturer in the tort of negligence

C. No. The wife should sue the car dealer in the tort of negligence

D. Yes. The wife can sue the car manufacturer for breach of contract

Answer 7

B