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Chapter

Cover Cheshire, Fifoot, and Furmston's Law of Contract

14. Privity of Contract  

M P Furmston

This chapter discusses the doctrine of privity of contract. It covers exceptions to doctrine, the Contracts (Rights of Third Parties) Act 1999; and attempts to impose liability upon nonparties to the contract.

Chapter

Cover Complete Contract Law

12. Third Party Rights (the Doctrine of Privity)  

This chapter highlights the doctrine of privity of contract; that means it is about the rights and obligations of third parties. The starting point is the basic common law rule of privity. At common law, third parties have no general right to enforce contracts made by others. Likewise, contracts made by others cannot impose obligations on third parties. This is a fairly straightforward principle and is based on sound reasons, but in practice privity has become a complex area. The existence of the rule resulted in a range of clever devices being developed to get around it, all of which are of commercial importance. And the rule against parties enforcing contracts made by others in particular was also severely criticized over the years for various reasons. The basis for such criticism resulted in some partial exceptions being developed in the case law, and ultimately in a statute—namely the Contracts (Rights of Third Parties) Act 1999. This complicates matters further because the Act only applies in certain circumstances and its application can be excluded by the terms of the contract. As such, there will be circumstances in which the common law exceptions and devices remain relevant, and they must therefore be studied alongside it.

Chapter

Cover Card & James' Business Law

5. An introduction to the law of contract  

This chapter provides an introduction to the law of contract. It discusses several preliminary pre-contractual issues and explains that though most contracts do not require formalities, a number of important ones impose certain requirements and failure to comply may render the contract unenforceable. The ability of persons to enter into contracts (that is, their capacity) is also discussed where it is noted that certain persons cannot enter into legally binding contracts. The chapter also clarifies why contracts are enforced. This chapter also discusses the rules governing privity of contract and considers the role of third parties in enforcing a contractual term via statute and common law principles.

Chapter

Cover Contract Law

25. Third Parties  

This chapter examines the impact of a contract on third parties. It addresses two main questions: whether or not a third party can acquire any rights under the contract, and whether or not the contract can impose upon him obligations or liabilities. The general rule adopted by English law is that the contract creates rights and imposes obligations only between the parties to the contract: the third party thus neither acquires rights under the contract nor is he subject to liabilities. This general rule is known as the doctrine of privity of contract. The Contracts (Rights of Third Parties) Act 1999, however, provides a relatively simple mechanism by which contracting parties can confer upon a third party a right to enforce a term of their contract. The dominant philosophy that underpins the 1999 Act is one of freedom of contract and, this being the case, the success of the Act in practice will depend upon contracting parties themselves. The chapter examines the individual sections of the 1999 Act, the exceptions to the doctrine of privity that existed at common law and under various statutes prior to the enactment of the 1999 Act. The chapter concludes by considering the extent to which a third party can be subject to an obligation by a contract to which he is not a party.

Chapter

Cover Complete Land Law

13. The Running of Covenants in a Lease  

Titles in the Complete series combine extracts from a wide range of primary materials with clear explanatory text to provide readers with a complete introductory resource. This chapter addresses issues stemming from the following question: if a tenant assigns their lease, or sublets, and/or a landlord sells their fee simple, who is now entitled to enforce the various terms of the lease, and against whom can they be enforced? The discussions cover the liability of original parties after assignment in pre-1996 leases; the Landlord and Tenant (Covenants) Act 1995; position of equitable leases; and the position of subtenants and head landlords.

Chapter

Cover Poole's Casebook on Contract Law

7. Privity of contract and third party rights  

Robert Merkin and Séverine Saintier

Poole’s Casebook on Contract Law provides a comprehensive selection of case law that addresses all aspects of the subject encountered on undergraduate courses. This chapter examines privity of contract, its relationship with consideration, and the ability of third parties to enforce contractual provisions for their benefit. The doctrine of privity of contract provides that the benefits of a contract can be enjoyed only by the parties to that contract and only parties can suffer the burdens of the contract. At common law, third party beneficiaries could not enforce a contractual provision in their favour so various devices were employed seeking to avoid privity. Statute now allows for direct third party enforcement but in limited circumstances. This chapter examines the background to privity and the attempted statutory reform in the Contracts (Rights of Third Parties) Act 1999 as it has been interpreted in the case law. The chapter also discusses the common law means of avoiding privity as illustrated by the case law, e.g. agency, collateral contracts, and trusts of contractual obligations. Finally, it assesses the remedies available to the contracting party to recover on behalf of the third party beneficiary of the promise, including the narrow and broad grounds in Linden Gardens Trust. It concludes by briefly considering privity and burdens—and the exceptional situations where a burden can be imposed on a person who is not a party to the contract.

Chapter

Cover Poole's Casebook on Contract Law

7. Privity of contract and third party rights  

Robert Merkin KC, Séverine Saintier, and Jill Poole

Poole’s Casebook on Contract Law provides a comprehensive selection of case law that addresses all aspects of the subject encountered on undergraduate courses. This chapter examines privity of contract, its relationship with consideration, and the ability of third parties to enforce contractual provisions for their benefit. The doctrine of privity of contract provides that the benefits of a contract can be enjoyed only by the parties to that contract and only parties can suffer the burdens of the contract. At common law, third party beneficiaries could not enforce a contractual provision in their favour, so various devices were employed seeking to avoid privity. Statute now allows for direct third party enforcement, but in limited circumstances. This chapter examines the background to privity and the attempted statutory reform in the Contracts (Rights of Third Parties) Act 1999 as it has been interpreted in the case law. The chapter also discusses the common law means of avoiding privity as illustrated by the case law, e.g. agency, collateral contracts, and trusts of contractual obligations. Finally, it assesses the remedies available to the contracting party to recover on behalf of the third party beneficiary of the promise, including the narrow and broad grounds in Linden Gardens Trust. It concludes by briefly considering privity and burdens—and the exceptional situations where a burden can be imposed on a person who is not a party to the contract.

Chapter

Cover Anson's Law of Contract

21. Third Parties  

Jack Beatson, Andrew Burrows, and John Cartwright

This Chapter deals with the scope of a valid contract when formed, and the question: to whom does the obligation extend? This question is considered under two separate headings: (1) the acquisition of rights by a third party, and (2) the imposition of liabilities upon a third party. At common law the general rule is that no one but the parties to a contract can be entitled under it, or bound by it. This principle is known as that of privity of contract.

Chapter

Cover Koffman, Macdonald & Atkins' Law of Contract

17. Privity and third party rights  

This chapter describes privity of contract, explaining the development of the doctrine and the problems associated with its application. The scope and usage of the Contracts (Rights of Third Parties) Act 1999 is discussed. The tensions inherently created by the possible freedom of the contracting parties to vary or cancel a third party’s right under an agreement are highlighted. Circumventions of, and exceptions to, the doctrine are also addressed including limitations on the doctrine which may be brought about by an assignment of contractual rights and the doctrine of agency. Finally, the issues surrounding privity and the doctrine of consideration are noted.

Chapter

Cover O'Sullivan & Hilliard's The Law of Contract

6. Privity  

Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter examines the doctrine of privity in the law of contract. The doctrine of privity dictates that a person who is not a party to the contract cannot be granted contractual rights by the contract or be placed under contractual obligations by it. It explores the rationale of the principle, discusses the authorities that established it, and explores the various common law exceptions to the rule that a third party cannot acquire rights under a contract. This chapter also explores in detail the statutory exception to privity provided in the Contracts (Rights of Third Parties) Act 1999.

Chapter

Cover Introduction to Business Law

5. Intention, Capacity, Consideration, and Privity  

This chapter examines issues relating to contract formation. It discusses the elements of an intention to create legal relations and the presumptions relating to commercial or business agreements and domestic agreements. It considers the law relating to capacity to contract, looking at the enforceability of different types of contracts made with minors. It considers the validity of contracts made with corporations and persons who may lack capacity through mental illness or intoxication. It also explains the importance of consideration in a contract, what constitutes consideration, whether consideration provided is sufficient, and who must provide the consideration. It discusses the law relating to part-payment of debts and promissory estoppel. Finally, the chapter considers the doctrine of privity of contract, and the exceptions to the doctrine, including the Contract (Rights of Third Parties) Act 1999

Chapter

Cover Contract Law

18. Privity and third parties  

Protecting the rights of non-parties

This chapter examines how English law, through a doctrine known as privity of contract, deals with the problem posed by contracts whose performance involves third parties. According to the doctrine of privity, a contract ordinarily only affects persons who are party to it. Third parties are neither bound by the contract nor entitled to claim rights under the contract. However, the courts and Parliament developed a number of exceptions to the strict rule of privity, each of which gives third parties a right to sue under the contract in a certain type of situation. For example, the Contracts (Rights of Third Parties) Act 1999 gives third party beneficiaries a right to enforce contract terms. This chapter first considers the problem of third party rights in contracting before discussing the effects of privity and the provisions of the Contracts (Rights of Third Parties) Act 1999 in more detail.

Chapter

Cover Contract Law Concentrate

4. Privity and third party rights  

Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter discusses the doctrine of privity and third party rights. The doctrine of privity of contract provides that a person who is not a party to a contract (called a ‘third party’), cannot acquire rights under or enforce the provisions of that contract or rely on its protections even if the provisions were intended to benefit that third party. At common law there are complex, and sometimes artificial, ways to avoid this conclusion. More significant nowadays is the attempt to reform this principle by legislation in the Contracts (Rights of Third Parties) Act 1999, allowing some third party beneficiaries to enforce the provisions of contracts.

Chapter

Cover Poole's Textbook on Contract Law

7. Privity of contract and third party rights  

Robert Merkin, Séverine Saintier, and Jill Poole

Course-focused and comprehensive, Poole’s Textbook on Contract Law provides an accessible overview of the key areas on the law curriculum. According to the doctrine of privity of contract, only the parties to the contract are bound by, or can enforce, the obligations under the contract. A person who is not a party to a contract does not have any rights under that contract and is not subject to any of its obligations (or burdens). This chapter considers the rules of contract law, and related rules, that are applicable to contracts which stipulate third party rights. It considers the relevant provisions of the Contracts (Rights of Third Parties) Act 1999, the scope of the legislative reform, the test for third party enforceability and how the doctrine of privity of contract is related to the consideration requirement. It also looks at means of circumventing the privity doctrine such as assignment, and exceptions to the privity doctrine such as agency principles as employed in The Eurymedon. The chapter then examines remedies available to the promisee which have the effect of enforcing any promise in favour of a third party beneficiary or enabling substantial damages to be recovered to cover the third party’s loss. Finally, the means by which contractual burdens may bind third parties are examined.

Chapter

Cover Poole's Textbook on Contract Law

7. Privity of contract and third party rights  

Robert Merkin KC, Séverine Saintier, and Jill Poole

Course-focused and comprehensive, Poole’s Textbook on Contract Law provides an accessible overview of the key areas of the law curriculum. According to the doctrine of privity of contract, only the parties to the contract are bound by, or can enforce, the obligations under the contract. A person who is not a party to a contract does not have any rights under that contract and is not subject to any of its obligations (or burdens). This chapter considers the rules of contract law, and related rules, that are applicable to contracts which stipulate third party rights. It considers the relevant provisions of the Contracts (Rights of Third Parties) Act 1999, the scope of the legislative reform, the test for third party enforceability and how the doctrine of privity of contract is related to the consideration requirement. It also looks at means of circumventing the privity doctrine such as assignment, and exceptions to the privity doctrine such as agency principles as employed in The Eurymedon. The chapter then examines remedies available to the promisee which have the effect of enforcing any promise in favour of a third party beneficiary or enabling substantial damages to be recovered to cover the third party’s loss. Finally, the means by which contractual burdens may bind third parties are examined.

Chapter

Cover Contract Law Directions

13. Privity and the interests of third parties  

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter examines the privity rule, which states that only a party to the contract can sue upon it. It discusses the development of the privity rule, distinguishing the privity rule from the consideration rule, evading the privity rule, techniques for giving a right directly to a third party or apparent third party, specific performance in favour of a third party and damages for a third party’s loss, and the Contracts (Rights of Third Parties) Act 1999.

Chapter

Cover Contract Law Directions

13. Privity and the interests of third parties  

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter examines the privity rule, which states that only a party to the contract can sue upon it. It discusses the development of the privity rule, distinguishing the privity rule from the consideration rule, evading the privity rule, techniques for giving a right directly to a third party or apparent third party, specific performance in favour of a third party and damages for a third party’s loss, and the Contracts (Rights of Third Parties) Act 1999.

Book

Cover Concentrate Questions and Answers Contract Law
The Concentrate Questions and Answers series offers the best preparation for tackling exam questions. Each book includes typical questions, answer plans and suggested answers, author commentary, and other features. Concentrate Q&A Contract Law provides guidance on answering questions on the law of contract. The book starts with an introduction explaining how to use the book and exploring the skills necessary for success in contract law exams. The book then looks at offer and acceptance, certainty of terms, consideration and intention to create legal relations. After that it examines terms of the contract, exclusion/exemption clauses and unfair terms, misrepresentation, improper pressure, mistake and issues relating to illegality and restraint of trade. The final part of the book looks at frustration, damages, additional remedies, privity of contract and has a short section dealing with mixed questions. The book ends with a chapter containing advice on answering coursework questions.

Chapter

Cover Thompson's Modern Land Law

12. Freehold Covenants  

People who wish to develop their land, or build upon it, must obtain planning permission, applications for which are made public and those who may be affected by the action may make representations. The law governing this area is a highly complex one and involves the public control of land use. Private control of land use involves landowners seeking to regulate how land is used within a particular locality. This chapter deals with covenants made between freeholders and how successors in title to the original parties to the covenant can either acquire the benefit of a covenant or take subject to the burden of it. It first discusses the privity of contract before turning to the transmission of covenants, common law, equity, and restrictive covenants, and also considers remedies available in case a breach of covenant arises, discharge of covenants, and positive covenants.

Book

Cover Poole's Casebook on Contract Law

Robert Merkin QC and Séverine Saintier

Poole’s Casebook on Contract Law provides a comprehensive selection of case law that addresses all aspects of the subject encountered on undergraduate courses. Extracts have been chosen from a wide range of historical and contemporary cases to illustrate the reasoning processes of the courts and to show how legal principles are developed. The book begins with some guidance on reading cases, and then turns to agreement and agreement problems. Next it looks at the enforceability of promises and intention to be legally bound and the capacity to contract. The content of the contract is examined. Exemption clauses and unfair contract terms are analysed in detail. The book then considers initial impossibility, misrepresentation, duress, undue influence, and illegality. The book ends by discussing issues relating to breach of contract and remedies, and excuses for non-performance.