Third party rights—the common law doctrine of privity of contract
Third party rights—the common law doctrine of privity of contract

The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:

  • Third party rights—the common law doctrine of privity of contract
  • What does privity of contract mean?
  • Exceptions to the doctrine of privity of contract
  • Privity—the equitable exceptions
  • Privity—the statutory exceptions (The Contracts (Rights of Third Parties) Act 1999 and other statutory exceptions)
  • Privity—enforcing a contract against a third party
  • Privity—indirect effect on third parties
  • Liability in negligence cases
  • Intimidation cases

This Practice Note discusses the common law doctrine of privity of contract; the equitable and statutory exceptions to it; how the doctrine affects enforcing a contract against a third party and what happens when, notwithstanding the lack of privity, a contract has an indirect effect on a third party. For guidance on contracts and third parties more generally and on the Contracts (Rights of Third Parties) Act 1999 (C(RTP)A 1999), respectively, see Practice Notes:

  1. Contracts and third party rights

  2. Third party rights—the Contracts (Rights of Third Parties) Act 1999

What does privity of contract mean?

'Privity of contract' is a common law doctrine, which provides that you cannot either:

  1. enforce the benefit of, or

  2. be liable for any obligation under

a contract to which you are not a party.

Therefore, if your client is not a party to a contract (ie they are a third party) then they cannot sue or be sued under that contract.

Example:

A promises to B that they will pay a sum of money to C—C cannot sue A for that sum if A fails to pay.

Beswick v Beswick is considered to be the modern statement of the doctrine. Here, a coal merchant transferred his business to his nephew who promised him that he would, after the uncle's death, pay an annuity to the uncle's widow. After the uncle's death, the widow became his administratrix.

Related documents:

Popular documents