Privity Evaluation

• Common Law of Privity Before 1999 Was Strict

  • before the Contracts (Rights of Third Parties) Act 1999, discussed in Dunlop v Selfridge, strict rules enforced to prevent 3rd parties from claiming rights in a contract
  • however, courts developed a number of common law exceptions to avoid following the strict rules, allowed 3rd parties to claim some rights in a contract before the act was passed
• Collateral Contracts

  • 3rd party could claim rights and also be sued for claims made which affected a later contract, strong lights protected by the courts; Shanklin Pier v Detel
• Agency

  • in this case, 3rd party has significant power in setting the rights of others, see agent and principal as one; The Eurymedon
  • can be issues if agent agrees something the principal does not, any decision agent makes will be assumed as if it was actually made by the principal
• Restrictive Covenants

  • arguably problematic as where transfer of land was concerned, 3rd parties have rights created for a long time after original owner has moved on; Tulk v Moxhay
  • courts willing to enforce the rights of 3rd parties for decades after the original contract was transferred
• Special Exceptions/Cases

  • decision in Jackson v Horizon Holidays was monumental in giving rights to 3rd parties, allowed individuals in a contract to be able to claim for losses for other parties
  • uncertainty, held extension would only be in relation to families, 3rd party was unsuccessful in claiming losses, pulled out of purchasing land; Woodar v Wimpey
  • position backtracked, decided it didn't just apply to families, changes cause uncertainty, hopefully issue has been clarified; Linden Garden v Lenesta Sludge
• 3rd Parties

  • 3rd parties who relied upon promises could be left without justice where promises were not honoured
  • law lacked clarity, 3rd parties wishing to enforce a contract had to rely on common law exceptions depended on willingness of judge to be creative
  • numerous exceptions led to piecemeal approach rather than a structured and principled approach to the law - judges have tried to respond to Parliament as they become them