Privity of contract is a legal concept applicable principally to contracts involving the sale of goods or services. Privity of contract occurs only between the parties to a contract. A third party which, benefits under a contract does not have the right to proceed legally against the parties to the contract for entitlement in excess of its benefits as provided in the contract…
This facet of the rule became a hindrance, where the contract was made to the benefit of the third party. Collateral warranties support the viability of this rule.
Prior to 1833 there existed decisions in English Law, which permitted enforcement of the provisions of a contract by persons not party to the contract. The doctrine of privity emerged together with the doctrine of consideration, which states that consideration must move from the promisee. That is if nothing is given for the promise of something to be given in return, that promise is not legally binding unless promised as a deed.
In the case of Price v Easton, where a contract was made for work to be done in exchange for payment to a third party. When the third party attempted to sue for the payment, he was held to be not privy to the contract, and as such his claim failed1.
This was completely linked to the doctrine of consideration and was established by the case of Tweddle v Atkinson, where the plaintiff was unable to sue the executor of his father-in-law, who had promised to the plaintiff's father to make payment to the plaintiff, because he had not provided any consideration to the contract. The husband's claim against his father - in - law's estate was dismissed on the grounds that no consideration had moved from the husband2.
The doctrine was further developed...
Sometimes, the doctrine does not apply, either because of supervening principles of law or because of specific statutory provisions which allow a third party to enforce a right conferred on him by the contracting parties.
In Beswick v Beswick, a nephew bought his uncle's coal business. A term in this transaction was that the nephew would support his uncle's wife on the uncle's death. However, the nephew did not honour this and the widowed aunt was permitted to sue as executor of her husband's estate and obtain compensation4.
In Vandepitte v Preferred Accident Insurance co, it was held that a party to a contract can become a trustee for a third party of a right under the contract and thus confer such rights to a third party. After this the trustee can initiate steps to enforce performance as in the case of other equitable rights5.
In McCannell v Mabee McLaren Motors Ltd, the extent of enforceability of a contract between Studebaker, a car manufacturer, and a dealer by another dealer was decided by the court which held that "the agent of the several dealers to bring about privity of contract between them.
The consideration is not moving from the company to the dealer, but from one dealer to another" and that the test of agency was created by the efforts of the manufacturer in bringing the parties together6.
Further, in New Zealand Shipping Co. Ltd v A.M. Satterthwaite & Co. Ltd, Ajax was a manufacturer and vendor of drills sent the same by ship to New Zealand from England. The drill was damaged in transit by the NZ Shipping Co.
The bill of lading contained clauses, which stipulated that the shipper and sub contractors could not ...
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(“Privity of Contract Case Study Example | Topics and Well Written Essays - 6000 words”, n.d.)
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(Privity of Contract Case Study Example | Topics and Well Written Essays - 6000 Words)
“Privity of Contract Case Study Example | Topics and Well Written Essays - 6000 Words”, n.d. https://studentshare.net/law/271925-privity-of-contract.
In the response to the difficulties caused by conflicts in laws and contract disputes, international commercial arbitration devised a way in which such conflicts could be avoided and disputes solved easily out of court. This paper will assess whether the principle of privity of contract undermines the application and functioning of ICA in that it causes unnecessary disputes that have little to do with the actual contract and more to do with the method of arbitration, the conduct of arbitrations and the recognition of awards and orders.
5 (c)What was the nature of the term which the primary judge, Jagot J. had implied into the contract, and on what grounds and case law did the judges on appeal decide that such implied term (of fact) wasn’t required to give ‘business efficacy’ to the contract?
The respondents (growers) role was to rear chicken based in “Hunter Valley Region.” These chicks were supplied to them by the appellants (Steggles) whose processing plant was at Beresfield. When chicks had grown, they were picked and paid for by appellants.
The doctrine of privity in contract means that only the parties involved in a contract are allowed to enforce it. It restricts possibility of a third party/beneficiary in enforcing a contract, (Atiyah, 1995).
Under the rule of consideration, the consideration has to move from a promisee to the promisor, this raises the doctrine of privity, where each party need to clearly show the people who are the parties in a given contract thereby defining their obligations.
Consumers are provided with several protections under contract law when they deal with sellers in connection with their purchases. If a purchase is made from a shop then the shop only is made liable under the contract. However under the law of torts there lies a concurrent liability placed on the manufacturer under circumstances where the faulty goods caused any personal injury or damage to the purchaser's property.
But before going into the main body of the report, I would going or see to the meaning of the following; contract, trust, constitution of trust, equity, Right of third party to enforce contractual term, privities of contract.
In this report as well I look at the complexity and restrictness of the rules governing enforceability of promises in deeds and look the question saying: Does current English law hold a fair balance between the interets of innocent volunteers and those of wronged beneficiaries (in breaches of trust)
There was a notice which said "All activities undertaken at your own risk." The boys, accompanied by Potter went to a cafe, owned by "Thrills and Spells", for lunch. The floor was unfinished and several rolls of linoleum were lying around. Edmund, one of the pupils, tripped over a roll of linoleum, hurt his head and became unconscious.
However, she may not be able to demand specific performance solely on the basis of the option, because the agreement remains incomplete - while other terms have been mutually agreed to between the parties, the new rental price remains to be fixed. On this basis, final agreement has not yet been reached between the parties (per Clause 4f).
In legal parlance, a restrictive covenant is one in which the covenantee is restrained, or prohibited from performing a deed or action, mutually agreed upon, by covenant. Although restrictive covenants of the kind seen above between the original owner and the co-owner are valid under law, a question would arise whether similar restrictive covenant would be enforceable in the event of a new purchaser coming into the scene.
His leg was also amputated because of frostbite. The plaintiff has attributed his sufferings and amputation of legs to the negligence of coastguard due to lack of appropriate, fast and rapid action taken by them.
The High Court of Justiceheard the case of Mr.
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