Privity

• The original rule is that only those who are party to a contract are bound by it and can benefit from it - Dunlop v Selfridge

  • Supported by the case of Beswick v Beswick
  • In Jackson v Horizon Holidays, it allowed Mr Jackson to claim on behalf of his family as he was a party to the contract
• One exception to the rule of privity is collateral contracts

  • This is where a related agreement runs alongside the main agreement
  • Shanklin Pier v Detel
• One exception to the rule of privity is agencies

  • This is when an agent is permitted to make a contract on behalf of another (principle)
  • The principle is bound by the terms of the contract although they didn't make it
  • The principle and the agent are treated as the same person
• One exception to the rule of privity is restrictive covenants

  • Under land law, this is when land is purchased, the seller and purchaser can form an agreement about what can be done with the land - Tulk v Moxhay
• One exception to the rule of privity is statutory exceptions - Contracts (Rights of Third Parties) Act 1999

  • This act allows a third party who is not party to the contract to sue one or both parties if:
  • s.1(1)(a) - The contract states that the third party should have rights OR s.1(1)(b) - The contract term is an attempt to confer a benefit to a third party
  • s.1(2) - The act will not apply if it appears that the parties did not intend a third party to have rights
  • s.1(3) - The third party must be expressly identified in the contract by name
  • Parties can include a term that excludes this act