What is the doctrine of privity of contract?
Only parties to a contract can enforce it or be bound by it. Third parties cannot sue or be sued on the contract.
Key cases that establish the general privity rule
Tweddle v Atkinson (1861) – son-in-law could not enforce contract between fathers.
Beswick v Beswick- wife had not made the requirements for privity
Why was the privity rule considered unfair?
It prevented intended beneficiaries from enforcing contracts made for their benefit (e.g. Beswick v Beswick – widow could not claim payments promised to her by her nephew).
exceptions made to privity
group bookings
agency
collateral contracts
restrictive covenants
alternative claims
statutory exception
exception 1- group bookings
party who made the contract can claim on behalf of 3rd parties.
Jackson v Horizon Holidays
Jackson v Horizon Holidays
Mr Jackson was able to recover for the disappointment suffered by his wife and children. this amounts to an exception
Exception 2- agency
When one of the parties to the contract is acting as an agent (on behalf of a 3rd party) then the principal will be bound by and be able to enforce the contract. agent and principal are treated as the same person.
Exception 3- collateral contracts
when the courts finds that a secondary contracts exists with the 3rd party, connected to the main contract.
Shanklin Pier v Detel Products
Shanklin Pier v Detel Products
D represented to C that the pain was suitable for painting the pier and that 2 cats would last 7 years. as a result C instructed the contractor to purchase the paint from D. After the paint pulled in 3 months, C sued D for compensation
Exception 4- Restrictive covenants
An agreement between 2 landowners in which one of them promises they will not do something on their land. Anyone who buys the land will also be bound by that promise
Tulk v Moxhay
Tulk v Moxhay
Tulk sold a piece of land with a covenant attached. the covenant required that the land be maintained as a public garden and but he built upon. moxhay had bought the land and intended to build.
exception 5- alternative claim
A 3rd party may be able to bring a claim in negligence, like in Donoghue v Stevenson
exception 6- Statutory: The Contracts (Rights of 3rd Parties) Act 1999
This act allows a 3rd party to enforce a contract against either of the parties if the following conditions apply:
- identification of the 3rd party in description
- contract expressly provides that the third party may enforce the contract (express right)
- the contract term is an attempt to confer the benefit of the term on the third party.
Nishin Shipping v Cleaves
If a contract confers a benefit on a 3rd party, the default position is enforceability, unless the parties clearly intended otherwise.
