Privity of Contract and Rights of Third Parties Flashcards
what is privity of contract?
no person can sue or be sued on a contract unless they are a party to it.
what are the exceptions to the doctrine of privity?
- agency.
- assignment.
- collateral contract.
- actions in tort.
how to establish an agency relationship?
- principal should be named and must be clear the agent is contracting on the principal’s behalf.
- agent should be authorised to act as agent.
- consideration has moved from the principal.
what is assignment>
when A is under a contractual obligaion to B and B assigns their contractual rights to C. may be possible for C to sue A on their promise to B.
However ‘non-assignment’ clauses in contracts are quite common.
what is a collateral contract?
between the promisor and third party.
how can an action in tort be an exception to privity of contract?
e.g donohue v stevenson- the plaintiff as the ultimate consumer of the goods could bring a claim in the tort of negligence against the manufacturer.
what did the contracts (rights of third parties) act 1999 do?
allows a party in limited circumstances to enforce a term to a contract in which they are not a party.
what is s1 of Contracts act 1999
- contract must specifically provide that the hird party can enforce a term of the contract.
or - if the agreement purported to confer a benefit on the third party.
- it was not the case that the contract parties ‘did not intend the term to be enforceable by the third party’
s(1)(3)- must be expressly named.
can the contracting parties, without the consent of the third aprty, vary or recind the contract to alter the third party’s rights?
they cannot without his consent if
- third party has communicated his assent to the term to the promisior.
- promisor is aware that the third party has relied on the term.
- promsior can reasonably be expected to have foreseen that the third party would rely on the term and the third party has in fact relied on it.
