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39.4 Privity of Contract - Coggle Diagram

- - - - Jackson v Horizon Holidays Ltd (1975)
        
        Mr. Jackson booked a holiday from him and his family
        
        the holiday was very disappointing
        
        he sued for damages for himself and his family
        
        court decided it would be unfair to limit the damages awarded to Mr. Jackson
        
        damages awarded reflected the loss suffered by all members of the holiday party
        
        it was decided that the rule didn't apply to contracts where one person would be expected to make contracts on behalf of themselves and others, such as holidays and restaurants.
- - - - agency arises when one person, the agent, is authorised to make a contract on behalf of another person, the principal.
        
        the principal and the agent are treated as being the same person, so the principle is a party to the contract.
        
        this occurs, e.g., when an employee make a contract on behalf of the company
      - the doctrine of the privity usually prevents a third party from relying on the terms of a contract - means an exclusion clause in the contact may not offer protection to anyone other than the parties to the contract
        
        Scruttons Ltd v Midland Silicones Ltd (1962)
        
        claimant was the owner of goods which were shipped for it by a carrier
        
        the contract limited the liability of the carrier for damage caused to the goods to $500.
        
        the carrier contract with the defendant to unload the goods.
        
        when doing so D negligently damaged them
        
        d was not party to the contract between the owner and the carrier & so the the doctrine of privity of contract prevent D being awarded the $500.
    - - court may be able to avoid the strict rule of privity by finding a second contract alongside the main agreement
        
        Shanklin Pier Ltd v Detel Products Ltd (1951)
        
        contractors employed to paint the pier were instructed by the pier company to use paint manufactured by Detel
        
        paint was brought by the contractors from Detel
        
        Detel made a representation to the pier company that the paint would last for seven years
        
        paint only lasted 3 months
        
        there was no privity of contract between the pier company and the defendant paint manufacturer but the court found that there was a collateral contract between them to the effect that the paint would last for 7 years.
        
        the consideration was the instruction given by the pier company to its contractors to order the paint from D.
    - - In English land law, if a purchaser of land promises the seller in contract for the purchase of land that they will not do something on the land, then this is a restrictive covenant.
        
        this becomes part of the title to land that an owner had
        
        that promise will 'run with the land', meaning that all subsequent purchasers of that land are legally bound by that promise even thought they aren't the parties to the initial contract.
        
        Tulk v Moxhay (1848)
        
        Tulk sold a house and the centre gardens in Leicester Square to Elms.
        
        contract included a restrictive covenant that the gardens were not to be built on
        
        Elm sold the gardens to Moxhay who intended to build on them
        
        because the covenant ran with the land, Tulk could enforce it against Moxhay even though they had no direct contract.
- - - - (1) Subject to the provisions of this Act, a person who is not a party to the contract (a 'third party') may in his own right enforce a term of the contract if --
        
        (a) the contract expressly provides that he may, or
        
        (b) subject to subsection (2), the term purports to confer a benefit on him
        
        (2) Subsection (1)(b) does not apply if on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party
        
        (3) the third part must be expressly identified in the contract by name, as a member of a class or as answering a particular description but need not be in existence when the contract is entered into.
      - therefore, someone who isn't party to a contact ('a third party') may enforce the contract against wither both of the actual parties to the contract if:
        
        (1) the third party is expressly identified by name, or as a member of a class, or as answering a particular description, and
        
        (2) the contract expressly provides that the third party may enforce the contract, or
        
        (3) the contract term is an attempt to conger the benefit of the term on the third party
        
        Beswick v Beswick (1967)
        
        Mr Beswick made a contract with his nephew to sell his coal merchant's business, in exchange for weekly payments to the uncle for life, and after his death, to his wife, the nephew's aunt.
        
        after the death of the uncle, the nephew refused to pay the weekly payments to his aunt
        
        court decided that the aunt wasn't party to the contract and so there was no privity of contract.
        
        reason the aunt would now be able to claim under the Contract (Right of Third Parties) Act 1999 is that she was named in the contract, and the contract intended to confer a benefit on her
    - - parties to the contract have the right to exclude the Act from benefiting a third party
        
        where the act applies, under s 3 if the contract is being enforced by a third party, the person who made the contract could rely on any defence or valid exclusion clause that was available to original contracting party: if A books a holiday with B and the list given to A of those going on that holiday includes another C, C will be able to claim rights under the contract
        
        a will however will be able to rely on any defence they might have, including relying on any valid term of the contract limiting their liability for any breach of that contract
        
        one success among many attemot to evade the consequences of the privity rule in this context is found in New Zealand Shipping Co. v Satterthwaite (1974)