Privity of Contract Flashcards
(12 cards)
What does the doctrine of privity of contract state?
A. Only third parties can enforce benefits under a contract
B. Only parties to a contract can sue or be sued on it
C. Contracts must always be in writing to be enforceable
D. Anyone who benefits from a contract has enforceable rights
B. Only parties to a contract can sue or be sued on it.
Explanation: A non-party cannot enforce or be bound by a contract (Tweddle v Atkinson).
Which case confirmed that a person who is not a party cannot sue on a contract, even if the contract was intended to benefit them?
A. Beswick v Beswick
B. Tweddle v Atkinson
C. Shanklin Pier v Detel
D. L’Estrange v Graucob
A. Beswick v Beswick.
Explanation: The House of Lords allowed enforcement only via the deceased’s administratrix, not in her personal capacity, reinforcing privity.
Which common-law device allows a third party to enforce benefits without statutory intervention?
A. Mistake
B. Capacity
C. Collateral contract
D. Misrepresentation
C. Collateral contract.
Explanation: A separate side-agreement can confer direct rights (Shanklin Pier v Detel).
Under the Contracts (Rights of Third Parties) Act 1999, when can a third party enforce a term?
A. If they paid consideration directly to the promisor
B. If the contract expressly provides or purports to confer a benefit on them
C. If the contract is executed as a deed
D. If the promisor consents at or after formation
D. If the promisor consents at or after formation.
Explanation: s.2–3 require third-party consent before variation or rescission once they’ve assented, relied, or started proceedings.
Alice and Bob agree that “Charlie shall receive £500.” Charlie is not party to their contract. What is Charlie’s position?
A. He can sue Bob if he gives fresh consideration
B. He can’t sue unless the 1999 Act applies or a workaround exists
C. He can automatically enforce based on clear agreement
D. He can enforce only via assignment from Alice
B. He can’t sue unless the 1999 Act applies or a common-law workaround is used.
Explanation: Without statutory conferral or workarounds (e.g. trust, agency), Charlie lacks standing.
Diane contracts with Emma as agent for Frank. Emma, on Frank’s behalf, contracts to supply goods to George. Who may George sue?
A. Only Emma
B. Emma and Frank
C. Only Diane
D. Only Frank
C. Only Diane.
Explanation: Diane is the actual principal disclosed by Emma acting as agent; Diane sues or is sued (Smith v Anderson).
A contract grants benefits to “all members of the Young Artists’ Circle.” Unnamed members seek enforcement. Under the 1999 Act, are they third-party beneficiaries?
A. No, because “members” is too broad and uncertain
B. Yes, if they can be identified as part of that class
C. No, because only named individuals count
D. Yes, regardless of class definition
B. Yes, if they can be identified as part of that class.
Explanation: A defined class (by description) suffices under s.1(3) if members are ascertainable.
Helen contracts with Ian to hold £1,000 on trust for Jack. Jack sues for breach. Which is correct?
A. He fails—trusts can’t override privity
B. He succeeds, as volunteer beneficiaries can enforce trusts
C. He succeeds only if there’s valid consideration from Jack
D. He fails—privity prevents trust enforcement
C. He succeeds only if there’s valid consideration from Jack.
Explanation: Under trust law, a voluntary trust for an unconnected volunteer beneficiary may be unenforceable without consideration or a deed.
Which defense may a promisor raise against a third-party claim under the 1999 Act?
A. Illegality unrelated to the third party
B. Any defense that would have been good against the original promisee
C. A new equitable estoppel argument
D. A claim for restitution
B. Any defense that would have been good against the original promisee.
Explanation: s.6 allows all defenses available against the promisee to be raised against the third party.
Gina, a third party, relied on her rights under a contract. The parties then vary the contract without Gina’s consent. Is the variation effective as against Gina?
A. Yes, if it doesn’t reduce her benefit
B. No, since Gina’s assent or reliance “vests” her rights
C. Yes, because original parties can always vary
D. No, unless Gina initiates proceedings
B. No, since Gina’s assent or reliance “vests” her rights.
Explanation: Once a third party has assented, relied, or begun proceedings, the term can’t be varied without their consent (s.2–3).
Which situation falls outside the 1999 Act and remains barred by traditional privity?
A. A collateral warranty not incorporated into the main contract
B. A genuine term conferring benefit on a class
C. A term expressly naming the third party
D. A deed granting direct rights
A. A collateral warranty not incorporated into the main contract.
Explanation: Only terms of the contract itself can be enforced; separate collateral warranties lie outside the Act.
A third-party claim arises under an oral contract made by handshake. Can the third party enforce?
A. No—writing is required for third-party rights
B. Yes—no formal requirement under the Act
C. No—oral contracts can’t confer third-party benefits
D. Yes—but only if validated by deed
C. No—oral contracts can’t confer third-party benefits.
Explanation: While the Act doesn’t itself require writing, many third-party rights (e.g. guarantees) must satisfy underlying formalities; pure oral contracts rarely produce enforceable third-party terms.
