Privity of Contract

Question 1

non-assignment clause

Answer 1

the parties can agree that assignment of rights is prohibited

Question 2

Can restitution be used to circumvent privity of contract?

Answer 2

No

Question 3

Contracts (Rights of Third Parties) Act 1999 allows a third party

Answer 3

to enforce a term of a contract to which they are not a party (in ltd. circumstances), even if they have not provided consideration

Question 4

general rule - doctrine of privity

Answer 4

A person who is not a party to a contract cannot acquire any rights under that contract or be subject to any of its obligations.

Question 5

specific performance is awarded at

Answer 5

the court’s discretion

Question 6

exception to the rule that a party to a contract cannot sue and recover for the loss of a third party

Answer 6

contracts of convenience – one person enters into a contract on his own behalf but also on behalf of others e.g. family holidays, ordering meals in a restaurant for a party. The person who entered into the contract can recover for his own loss AND for the loss of those persons on whose behalf he made the contract

Question 7

Common law exceptions to privity of contract

Answer 7

Agency
Assignment
Actions in tort
Other judicial attempts to avoid the doctrine

Question 8

How does a collateral contract operate as an exception to privity of contract?

Answer 8

A collateral contract gives the person that is third party under the other contract direct contractual rights against the promisor under a separate contract

Question 9

General rule on assignment

Answer 9

a party can assign its rights under a contract (but not its obligations) to another party, but the contract concerned might prohibit this

Question 10

What are the 2 criteria under the CRTPA 1999 for the third party to acquire rights?

Answer 10

The contract must expressly state that the third party may enforce a term of the contract (either by referring to the third party by name, or as a class of person, e.g. previous tenant); OR

A term in the contract must purport to confer a benefit on the third party, and no other provisions in the contract show that the parties to the contract did not intend for the term to be enforceable by the third party

Question 11

Under what circumstances does the Contracts (Rights of Third Parties) Act 1999 enable a third party in his own right to enforce a term of a contract to which he is not a party?

Answer 11

Where the contract expressly provides that they may