PRIVITY OF CONTRACT & THIRD PARTIES

Question 1

GR: 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 or enforce the contract they are not party to.

Question 2

Methods to circumvent privity of contract

Answer 2

At common law:
- agency
- assignment
- collateral contract
- actions in tort

Statutory
- Contract Rights of Third Parties Act 1999
* third party rights
* remedies to the TP

Question 3

Agency

Answer 3

= agent authorised, expressly or implicit, by principal to contract on principal’s behalf

Question 4

Agency elements

Answer 4

● Principal named and clear that agent contracting on principal’s behalf
● Agent should be authorised to act as an agent
● Consideration moved from the principal

Question 5

Assignment - rule

Answer 5

Not possible to assign obligations but possible to assign benefits.
The contract can prohibit any assignment.

Question 6

Collateral contract

Answer 6

if CC established between promisor and TP, then avoid difficulties of privity (TP and promisor can sue each other)

Question 7

Actions in tort - principle Donoghue

Answer 7

● remedy for breach from the producer/manufacturer to ultimate consumer
● only in law of tort – circumventing the privity of contract because the ultimate consumer is not the buyer even.
● liability regime for negligence will be pursued in tort

Question 8

When can a TP sue a contract to which it is not party under CRTPA 1999

Answer 8

1- The contract specifically provides that the TP can enforce a term of the contract; OR
2- Purports to confer a benefit on the TP (creates a rebuttable presumption of latter); AND
It was not the case that the parties did not intend for the term to be enforceable by the third parties.

Question 9

Remedies under Third Part Rights 1999

Answer 9

same remedies as the parties to the contract

Question 10

Can parties rescind, vary, extinguish the contract if a TP has a right to enforce the terms under the contract?

Answer 10

They cannot without the consent of the TP if:
● The TP has communicated (words or conduct) his assent of the term to the promisor;
● The promisor is aware the TP has relied on the term; or
● Promisor can be reasonably expected to have foreseen that the TP would rely on the term and the TP has in fact relied on it