Privity

Question 1

What is Privity

Answer 1

Only parties to a contract can sue or be sued on it. A third party cannot enforce a contract. Consideration must move from the promisee

Question 2

What case shows that consideration must move from the person bringing the claim

Answer 2

Tweddle v Atkinson - A husband tried to enforce a contract between two fathers for money to be paid to him. He failed because he provided no consideration.

Question 3

Which case shows that only a party to a contract can sue on it.

Answer 3

Dunlop v Selfridge - Dunlop attempted to sue a retailer for breaking a resale price agreement, but failed because there was no contract between them. Confirms the strict Privity Rule.

Question 4

What case shows the harshness of the rule

Answer 4

Beswick v Beswick - A nephew promised to pay money to his uncle and then to the uncle’s wife after his death. Widow could not enforce the contract because she was not a party.

Question 5

What was the rule before the Contracts (Rights of Third Parties) Act 1999

Answer 5

• Only a party to a contract could enforce it

Question 6

What were the Pre-1999 Exceptions

Answer 6

• Collateral Contracts
• Agency
• Trust of a Promise
• Holiday
• Restrictive Covenants

Question 7

What is the Contracts (Rights of Third Parties) Act 1999

Answer 7

• This act reformed the law and allows third parties to enforce contracts in certain situations

Question 8

When can a third party enforce a term

Answer 8

• They are clearly identified in the contract (by name, as a member of class, by description)
• Either: The contract expressly says they can enforce it, Or the term appears to confer a benefit on them.

Question 9

What case was the Holiday Exception pre 1999

Answer 9

Jackson v Horizon Holidays Ltd - A man booked a family holiday which was disappointed. Although only he was party to the contract, he was allowed to claim damages for his family as well.

Question 10

What case was the Collateral Contract Exception pre 1999

Answer 10

Shanklin Pier Ltd v Detel Products Ltd - Paint manufacturer promised paint would last seven years, only lasted three months. Although the main contract wasnt with the manufacturer, the court found there was a separate colleteral contract based on the promise

Question 11

What case shows excluding the Act

Answer 11

Parties can state that the 1999 Act does not apply
- Nisshin Shipping v Cleaves: Confirmed that parties can exclude third-party rights under the Act.