19-Continued: Privity And Intent To Creat Legal Relations Flashcards by Dom WRIGHT

What is privity of contract?

Only those who are parties to a contract are bound by it and can benefit from it.

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Only those who are parties to a contract are bound by it and can benefit from it.

What principle is this referring to?

Privity of contract.

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What case demonstrates the principle of privity?

Dunlop Tyres v Selfridge (1915)

Facts: Dunlop sold tyres to B with promise not to sell for less. B sold to Selfridge for less and Dunlop attempted to sue Selfridge.

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Dunlop Tyres v Selfridge (1915)

What principle does this support?

Principle: Privity

Facts: Dunlop sold tyres to B with promise not to sell for less. B sold to Selfridge for less and Dunlop attempted to sue Selfridge.

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What rule is the rule of privity based on and what case supports that rule?

Consideration must move from the promisee

Tweddle v Atkinson (1861)

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What case demonstrates a judge going against the rule of privity regarding people acting on behalf of a group?

Jackson v Horizon Holidays (1975)

Facts: Jackson booked holiday for himself and fam but holiday was not satisfactory. Damages awarded reflected loss suffered by all members of party.

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Jackson v Horizon Holidays (1975)

What does this case demonstrate?

Example of: when rule of privity was not followed to avoid injustice.

Facts: Jackson booked holiday for himself and fam but holiday was not satisfactory. Damages awarded reflected loss suffered by all members of party.

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Name two general exceptions to the rule of privity, and example case or circumstance where necessary.

1) Agency-acting on behalf of another person (the principal). Such as employee making contract on behalf of company.
2) Collateral contracts-Shanklin Pier v Detel Products Ltd (1951)

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What case demonstrates that a general exception to the rule of privity can be found in collateral contracts?

Shanklin Pier v Detel Products (1951)

Facts: Pier told contractors only to use paint by Detel. Detel attempted defence of privity but consideration existed via contractors.

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Shanklin Piet v Detel Products (1951)

Example of: Collateral contract exempting the rule of privity.

Facts: Pier told contractors only to use paint by Detel. Detel attempted defence of privity but consideration existed via contractors.

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Under s1 Contracts (Rights of Third Parties) Act 1999 a third party may enforce obligation on both or either party if what three conditions are met?

1) 3rd party expressly identified by name.
2) expressly states that 3rd party may enforce contract
3) the terms of contract are attempt to confer benefit on the 3rd party

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What act and section provides that a third party can enforce a contract?

Contracts (Rights of Third Parties) Act 1999 s1

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What case demonstrates that before the Contracts (Rights of Third Parties Parties) Act 1999 a third party had difficulty in enforcing a contract?

Beswick v Beswick (1967)

Facts: Beswick made contract with nephew to sell business in exchange for weekly payments for life and for wife after his death. After death wife did not receive payment and D used defence of privity which was upheld.

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Beswick v Beswick (1967)

Example of: how before the Contracts (Rights of Third Parties) Act 1999 a 3rd party couldn’t enforce a contract.

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Contracts (Rights of Third Parties) Act 1999 s3

Provides that where 3rd party is enforcing a contract, person who made contract can rely on any defence or valid exclusion afforded the 2bd party.

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Provides that where 3rd party is enforcing a contract, person who made contract can rely on any defence or valid exclusion afforded the 2bd party.

Act and section?

Contracts (Rights of Third Parties) Act 1999 s3

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What case demonstrates that legal relations may not always exist in a business transaction?

Jones v Vernons Pools (1938)

Facts: C’s football betting slip had ‘binding in honour only’ written on it, meaning there was no intention to create legal relations.

Jones v Vernons Pools (1938)

Principle: In business transactions there is not always intent to create legal relations.

Facts: C’s football betting slip had ‘binding in honour only’ written on it, meaning there was no intention to create legal relations.

Which case demonstrates that burden of proof is on the party seeking to est. that there is no legal intention?

Edwards v Skyways (1969)

Facts: Redundancy pay to pilots.

Edwards v Skyways (1969)

Principle: burden of proof is with party seeking to est. no legal intention.

Facts: Redundancy pay to pilots.

What case demonstrates that promotional gifts can constitute a legal intention?

Esso v Customs and Excise (1976)

Facts: World Cup coins with buying petrol. Esso trying to gain business from promotion, therefore legal intention exists.

Esso v Customs and Excise (1976)

Principle: promotional gifts can constitute intention to create legal relations.

Facts: Esso offered World Cup coins to people buying fuel.

What case demonstrates that prizes offered in competitions can constitute intention to create legal relations?

McGowan v Radio Buxton (2001)

Facts: Radio offered prize car to winner, but only sent a model car. Radio attempted defence of no legal relations but this failed.

McGowan v Radio Buxton (2001)

Principle: competition prizes can constitute intention to form legal relations if they are to increase business.

Facts: Radio offered prize car to winner, but only sent a model car. Radio attempted defence of no legal relations but this failed.

What case demonstrates that a letter of comfort is not always an intention to create legal relations?

Kleinwort v Malaysian Mining Corp (1989) Facts: K lent £10m to a subsidiary of MMC. MMC would not guarantee loan but issued comfort letter. No intention to create legal relations, if K needed a guarantee they should have insisted on one.

Kleinwort v Malaysian Mining Corp. (1989)

Principle: A letter of comfort is not always an intention to create legal relations. Facts: K lent £10m to a subsidiary of MMC. MMC would not guarantee loan but issued comfort letter. No intention to create legal relations, if K needed a guarantee they should have insisted on one.

What is a letter of comfort?

Written assurance by parent company in respect of its subsidiary that it can repay a loan.

Written assurance by parent company in respect of its subsidiary that it can repay a loan. What is this called?

A letter of comfort

What case demonstrates an occasion when it was not clear whether it was a business or domestic agreement?

Sadler v Reynolds (2005) Facts: Journalist ghost-writing for businessman who were friends.

Sadler v Reynolds (2005)

Example of: somewhere between business and domestic agreement. Facts: Journalist ghost-writing for businessman who were friends.

Are social and domestic agreements assumed to be binding or non-binding?

Non-binding

What case demonstrates that an agreement between a married couple may not be binding especially after divorce?

Balfour v Balfour (1919) Facts: Husband working abroad agreed to pay wife income of £30/month then they divorced but agreement was not legally binding.

Balfour v Balfour (1919)

Example of: a case where an agreement made by married couple may not be binding especially after divorce. Facts: Husband working abroad agreed to pay wife income of £30/month then they divorced but agreement was not legally binding.

What case is an example of agreements made between a previously married couple would usually be regarded as binding?

Merritt v Merritt (1970) Facts: Husband left wife and agreed to pay income if she paid off mortgage. Held to he legally binding.

Merritt v Merritt (1970)

Example of: agreements made after divorce are usually seen as intended to be binding. Facts: Husband left wife and agreed to pay income if she paid off mortgage. Held to he legally binding.

What case demonstrates that there is a presumption that cohabitants would not intend to create enforceable contracts between themselves?

Jones v Padavatton (1969) Facts: Mother asks daughter to move in with her while she studies but daughter doesn’t pass exams for years. No legal intention found.

Jones v Padavatton (1969)

Principle: presumed that cohabitants don’t intend to create enforceable contracts amongst themselves. Facts: Mother asks daughter to move in whilst she studies for exams but girl doesn’t pass after years. No legal intention found.

What case demonstrates that if money changes hands even in social situations this is usually regarded as intending to create legal relations?

Simpkins v Pays (1955) Facts: A lodger and 2 other household members enter competition and fill in form in landlords name. They must share winning for as seen as legally binding.

Simpkins v Pays (1955)

Principle: if money changes hands even in social situations then legal intention is presumed. Facts: A lodger and 2 other household members enter competition and fill in form in landlords name. They must share winning for as seen as legally binding.

What case demonstrates that if parties put financial security at risk then there is presumed to be an intention to create legal relations?

Parker v Clarke (1960) Facts: Young couple persuaded by older couple to move in to their house with promise to inherit property. Couples fell out but it was legally binding.

Parker v Clarke (1960)

Principle: if parties risked financial security then contract is usually seen as binding. Facts: Young couple persuaded by old couple to move in and inherent house. Couples fall out but agreement was binding.