Privity Of Contract

Question 1

Privity of contract is that only parties to a contract can enforce the agreement or have it enforced against them

Question 2

Only parties to a contract can enforce it or be sued under it

Answer 2

Dunlop OR Tweddle v Atkinson

Question 3

A party can only sue to recover their own losses

Answer 3

Beswick v Beswick

Question 4

A third party cannot enforce their rights unless it falls within one of the common law exceptions or the statutory exceptions (1)

Answer 4

1. contract (Rights of third parties) Act 1999

Question 5

Common law expectations: collateral contracts- if there is a second contract running alongside the main one a third party can enforce the agreement

Answer 5

Shanklin Pier Ltd

Question 6

Common law expectations: restrictive covenants- where a purchaser of land promises to do or not to do something in relation on that land, it becomes a part of the lands title. The covenant will run with the land and all subsequent buyers are bound by it

Answer 6

Tulk v Moxhay

Question 7

Common law expectations: special cases- where one person makes a contract on behalf of themselves and others, they are permitted to sue on behalf of others, as they were intended to benefit from the agreement

Answer 7

Jackson

Question 8

Common law expectations: agency- an agency is authorised to make an agreement on behalf of someone - the principle. The principle, as third party, has the right to enforce the terms of the agreement.

Question 9

Common law expectations: agency- if an agent makes a contact without the principal or third party being fully aware of the terms, the agreement cannot be legally enforced, as they are strangers to the contract

Answer 9

Scruttons Ltd

Question 10

Common law exceptions: assignment- a party may give their rights under an agreement to another without the other party to the agreement’s permission, as long as a benefit is being assigned. If it is a liability the party’s agreement is required

Answer 10

NO PRECEDENT

Question 11

Statutory exception: governed by

Answer 11

S1 contracts (rights of third parties)act 1999

Question 12

Statutory exception: if a party is specifically mentioned in the contract as someone who is authorised to enforce the terms of the agreement they are permitted to do so

Answer 12

S1(1)(a) contract (rights of third parties) act 1999

Question 13

Statutory exception: if a party is mentioned as someone the contact purports to confer a benefit upon, they can enforce this right

Answer 13

S1(1)(b) contracts (rights to third parties) act 1999

Question 14

Statutory exception: However, in relation to s1(1)(b) they must expressively be identified in the contract by name, as a member of a class or as answering a particular description

Answer 14

S1(3) contracts (rights to third parties) act 1999

Question 15

Statutory exception: the common law practices still remain good law

Answer 15

S7 contracts (rights to third parties) act 1999

Question 16

Statutory exception: the parties to the contract are not permitted to rescind the contract or vary it to alter or extinguish the rights of the third party without their consent, if the third party has communicated their agreement to initial term, relied on it and the promisor is aware of this or they relied on the term and the promisor can reasonably be expected to foresee the reliance

Answer 16

S2 contracts (rights to third parties) act 1999