Privity of Contract

Only parties to a contract may sue or be sued on it, and consequently provides rights and imposes obligations on those parties alone. The burden of the contract should not be imposed on a 3rd party.

Tweddle v Atkinson

**Beswick v Beswick

Dunlop v Selfridge established 2 principles**

only a party to a contract can sue on it; and

only a person who has given consideration can enforce a promise

Jackson v Horizon Holidays Ltd

the contract was made for the benefit of the whole family, therefore he could recover on their behalf.

Woodar Investments v Wimpey

rejected the idea of circumventing the doctrine of privity, and said it was confined to family situations and should not extend to commercial contracts.

Exceptions to the doctrine of privity of contract

Trusts

ruled by the law of trusts, not law of contracts

Agency

If the principal is disclosed, then the agent drops out of the agreement leaving an enforceable contract between the principal and the third party.

if the principal is undisclosed, there will be a true exception tot he doctrine of privity, and the third party will be able to enforce the cotnract against the principal (and vice versa) even though he was not aware that the principal was a party tot he contract.

Land

restrictive covenant attached to land will be binding not only on the original parties, but also on 3rd parties who later acquire the land with knowledge of the covenant.

Tulk v Moxhay

Assignment

a party can assign or transfer to another person the rights contained in the contracts but cannot without the consent of the other person, assign the burden of his contractual obligations.

Collateral contracts

a promise that is not part of the main contract is part of another contract related to the same subject matter.

when a person buys goods and is given a manufacturer's guarantee - the contract is between the consumer and the retailer, but the guarantee amounts to a collateral contract btw the customer and the manufacturer.

Joint Parties

Tort

a person injured as a result of someone else's negligence, but not in a contractual relationship with that person, may success in the tort of negligence.

Donoghue v Stevenson

Statutory exceptions

Road Traffic Act 1988

the driver is required to take out insurance to cover possible claims by persons who are injured as a result of the actions of the driver of a vehicle. The third party can make a direct claim against the insurance company, although he is not party to the contract.

Married Women's Property Act 1882

a husband can take out an insurance policy for the benefit of his wife and children. The proceeds are held in trust and do not form part of the estate for the inheritance purposes.

Companies Act 2006

S33 - provisions of the company constitution bind the company and its members to the same extent as if there were covenants between the company and its shareholders, and shareholders amongs themselves.

Bills of Exchange Act 1882

persons who come into possession of a cheque may sue the drawer of the cheque even though they have no contract with him.

The Contracts Act 1999

applies to all contracts made on or after 11 May 2000, where the privity rule should no longer apply.

people who are not parties to a contract can sue on it where:

the contract expressly provides that they may do so; or

the contract purports to confer a benefit upon them, unless the parties did not intend it to be enforceable.