Third Party Rights

What is the Doctine of privity?

At COMMON LAW, third parties to contract have no rights under it.

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STATUTE: Contracts (Rights of Third Parties) Act 1999 give third parties rights under contract

At COMMON LAW there are exceptions and devices that allow us to AVOID THE DOCTRINE OF PRIVITY

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S 1(1): A person who is NOT a party to the contract may enforce a term of the contract IN HIS/HER OWN RIGHT… …if the test for third party enforceability is passed…(in s1(1)-(3)) S 1(5): The third party will have SAME REMEDIES (IN BOC ACTION) AS IF

PARTY TO CONTRACT S 1(6): The third party can enforce any exemption or limitation clause in contract

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How can a third part enforce the contract?

CONTRACT expressly states that TP has a right to enforce provisions under contract (s1(1)(a)) OR: CONTRACT expressly MENTIONS TP and ‘the term purport to confer a benefit’ on TP (s1(1)(b))

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Tweddle v Atkinson (1861) Contract between two fathers. The father of the bride and the father of the groom. They agree to pay groom regular sum of money. They agree that groom can sue on that promise. After death of wife’s father, husband sues esta

court said this failed because of privacy of contract

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DUNLOP PNEUMATIC TYRES LTD v SELFRIDGE [1915]

“My Lords, in the Law of England certain principles are fundamental. One is that only a person who is party to the contract can sue on it. The law won't allow someone outside of a contract to gain or lose from contract unless there is consideration

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Exceptions and devices

Action by the promisee, Collateral CONTRACT

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BESWICK v Beswick (1968)

Contract between uncle and nephew: sale of uncle’s business in return for pension for uncle, to continue after his death to widow, Widow unable to sue: fails for privity, widow sues as administrator of uncle’s estate, this case became an exception

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for the doctrine of privity

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Why didnt this happen in tweedle and atkinson?

Didn't have same lawyers, groom wasnt administer of father's estate, couldn't persuade them to sue on his behalf

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Second exception:Jackson v horizon holidays ltd (1975)

disaster holiday: family got very ill, CA awarded almost entire contract price to J. Denning (who makes stuff up) says J is entitled to damages on behalf of his family

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Linden gardens trust ltd v lenesta sludge (1994) (Commercial context exception)

A contracted B to renovate property, on the understanding that the property would soon be transferred to C… The contract between A & B excluded assignment… But after C bought the property, the House of Lords agreed that A could sue on C’s behalf… “It

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could be foreseen that damage caused by a breach would cause loss to a later owner… In such a case, it seems to me proper…to treat the parties as having entered into the contract on the footing that [A] would be entitled to enforce the contractual

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Collateral Contracts

Courts can infer existence of a separate contract with the promisor known as Collateral Contract. So if as long as there is a contract between A and B as well as a contract between A OR B and C, C can sue in original contract

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Where can this be seen? Shanklin Pier Ltd v Detel Products Ltd [1951]:

C instructs TP contractors to paint pier using paint recommended by D. Paint did not last seven years as promised. Contract for paint between TP and D. HELD: collateral contract between C and D that paint would last seven years

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Third Party Rights

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