evaluation

• intro

  privity is rule of contract law where only parties to a contract can enforce and are bound by it.

  based on idea that third parties who haven't given consideration shouldn't be able to enforce it.

  initially seems like a reasonable rule but some issues arise that create unfairness. CRTA 1999 has amended some of these issues, but further reform is still needed.
• point 1

  privity is unfair as it prevents person intending to benefit from contract from recieving such benefit
• evidence for point 1

  Tweddle v Atkinson, son was unable to claim as agreement was between his father and father in law. unfair as contract was clearly made to benefit newlywed couple.

  this rule also prevents subcontracters from being liable to original party and manufacturers of goods enforcing contract terms against eventual retail seller of goods
• DP for point 1


  however, to an extent this is rectified by CRTA 99 by allowing general right to sue if contract enables/benefits third party
• FDP for point 1


  unfortunately effectiveness of CRTA 99 is limited. doesnt apply to employment or statutory contracts.

  furthermore s.1(2) allows exclusion clauses to prevent this act affecting a contract. (e.g Prudential Assurance v Ayres)

  clause must be "reasonable" but this is undefined/vague.
• FDP2 for point 2

  furthermore s.1(2) allows more knowledgable party to take advantage by writing contract to exclude these third party rights.

  where parties are unaware of law, uncertainty is created as they may not write their contract clearly enough to enable legislation to apply even if that is what they intended/wished.
• point 2

  issues with privity in relation to gifts
• evidence for point 2

  if gift is recieved but has defect, receiver cannot return gift as they were not part of agreement between purchaser and seller. e.g in donoghue v stevenson claimant couldnt sue for breach of contract as her friend bought her the ginger beer, so she had to opt for negligence (demonstrates inconsistency with other areas of law such as tort law)
• DP for point 2 


  creates embarrassment of having to ask purchaser to return gifts if it has defects or other issues e.g wrong size, ingredients theyre allergic to etc.

  furthermore only the purchaser can sue and recieve damages for defected product
• FDP for point 2 


  CRTA 99 hasnt managed to reform this issue leaving the ultimate consumers of product without remedy
• FDP2 for point 2 


  however this has been addressed by other areas of contract law and it is possible to obtain gift reciepts for some contracts e.g rights under Consumer Rights Act 2015
• point 3

  due to unfairness common law exceptions have been developed by courts
• evidence for point 3 


  special cases where courts deemed it unfair to prevent enforcement of damages where group is intended to benefit, such as family in Jackson v Horizon.

  extends to property where property developers are able to recover losses on behalf of eventual users of property (Alfred McAlpine Construction Ltd v Panatown Ltd; Linden garden v lenesta)
• FDP for point 3 


  common law exceptions suggest judge's dissatisfaction with the law and willingness to avoid its unfairness along with many calls for reform.
• FDP2 for point 3 


  however these exceptions are specific rather than general principles and rights are retrospective, depends on creativity of judges to find exceptions such as collateral contracts which is difficult
• FDP3 for point 3


  issues with judicial law making such as it going against intention of privity rule and disrespecting doctrine of separation of powers
• FDP4 for point 3


  introduction of legislation has improved law, CRTA 99 gives general prospective rights to third parties which is clearer and easier to understand and apply than common law.

  furthermore act hasnt expressly repealed common law exceptions so they still provide some protection
• point 4


  debate as to whether privity should exist
• evidence for point 4


  consideration element identifies those who provide consideration for contract are a party to contract, arguably privity doesnt need to exist
• DP for point 4

  Tweddle shows that had son given consideration he couldve enforced contract. rule of privity didnt interfere or change this outcome

  although it is good that privity is consistent with other aspects of contract law, rule of consideration is straightforward and privity adds a further complicated layer to contract law that is unneeded/more inaccessible to less knowledgable parties like small businesses
• conclusion


  CRTA 99 resolved some problems privity creates by giving general right to parties intended to benefit from contract

  however, problems still remain as to what is specific enough to enable act to apply and it is still possible to exclude third party rights by exclusion clauses
• what happened in prudential assurance v ayres?

  Court ruled in favour of defendants, holding that they were protected by clause 2.1 of supplemental deed and could enforce it against the prudential