privity of contract

• general rule of privity

  a person not a party to a contract cannot sue, or be sued, under it

  (Dunlop Pneumatic Tyre Co Ltd)
• consideration must move from the promise

  (Tweddle v Atkinson)
• common law exceptions

  • special cases
  • agency and assignment
  • collateral contracts
  • restrictive covenants
• special cases

  (Jackson v Horizon Holidays) - damages awarded reflected all members of the holiday party
• agency and assignments

  an agency arises when one person (the agent) is authorised to make a contract on behalf of another (the principle). the principle is bound by the terms of the contract, even though he did not make the contract himself - an employee makes a contract on behalf of a company
• collateral contracts

  the courts may avoid the strict rule of privity by finding a second contract alongside the main agreement (Shanklin Pier Ltd)
• restrictive covenants

  in land law, if a purchaser of land promises the seller he will not do something on the land, then this is a restrictive covenant. this becomes part of the title to the land and the promise will 'run with the land' (Tulk v Moxhay)
• 1 statutory exception - The Contract (Rights of third parties) Act 1999

  • a 'third party' may in his own right enforce a term of the contract if: the contract expressly provides that he may or subject to subsection (doesn't apply if the parties didnt intent the term to be enforced by a third party) the term purports to confer a benefit on him
• 2 statutory exception

  • the third party must be expressly identified in the contract by name, as a member of a class, or as answering a particular description
• 3 statutory exception

  contracting parties can include an exoress term allowing them to take away or change that right once conferred, without the 3rd party's consent