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Chapter

Cover Anson's Law of Contract

23. Agency  

Jack Beatson, Andrew Burrows, and John Cartwright

Agency is the relationship that exists where one person (the principal) authorizes another (the agent) to act on its behalf and the agent agrees to do so. This Chapter discusses the modes of agency creation and the different kinds of agency, and the effect of agency: (a) the relations between the principal and third parties; and (b) the relations between the agent and third parties.

Chapter

Cover JC Smith's The Law of Contract

10. Third parties  

This chapter considers two principal questions: firstly, may a person who is not a party to a contract acquire rights under it? Secondly, can a contract impose duties on a person who is not a party to it? With some exceptions, the common law answered ‘No’ to both. A contract between A and B cannot be enforced by a third party, C, even if the contract is for the benefit of C. Nor can a contract between A and B impose burdens on C. Following the Contracts (Rights of Third Parties) Act 1999 there is now a statutory exception to the principle that C acquires no rights under a contract between A and B. Under this Act, a third party might be able to enforce a term of the contract if the contract expressly provides that they may, or if the relevant term purports to confer a benefit on them.

Book

Cover Poole's Textbook on Contract Law

Robert Merkin QC and Séverine Saintier

Course-focused and comprehensive, Poole’s Textbook on Contract Law provides an accessible overview of the key areas on the law curriculum. This book has been guiding students through contract law for many years. It places the law of contract clearly within its wider context, including the growing distinction between commercial and consumer contracting, before proceeding to provide detailed yet accessible treatment of all the key areas encountered when studying contract law. Part 1 considers formation, looking in detail at agreement, certainty and agreement mistakes, the enforceability of promises and the intention to be legally bound. Part 2 looks at content, interpretation, exemption clauses and unfair terms, performance, and breach. Part 3 considers the enforcement of contractual obligations including remedies, detailed treatment of damages for breach of contract, privity and third party rights, and discharge by frustration. Part 4 looks at methods of policing the making of a contract, such as non-agreement mistakes which render the contract void, misrepresentation, duress, undue influence, unconscionable bargains, and illegality. The book also includes references to relevant EU consumer legislation and introduces students to the various attempts (international and European) to produce a harmonized set of contract principles.

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.

Book

Cover JC Smith's The Law of Contract
Driven by exposition of the leading cases, JC Smith’s The Law of Contract offers the perfect balance between accessibility and authority. The strong focus on cases guides the reader through the intricacies of contract law with expert analysis ensuring key points are clear. The text begins with an introduction to contractual rights and duties. It looks at objectivity in contract law, the formation of bilateral and unilateral contracts, contract as agreement, offeror and offeree, estoppel, legal relations, and the role of third parties. It also considers the terms of the contract, interpretation of the contract, implication and rectification, and exclusion clauses and unfair terms. It goes on to look at issues such as duress, undue influence, good faith, capacity, illegality, contractual assumptions, breach of contract, remedies and damages, and remedies beyond compensatory damages.

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.

Book

Cover Contract Law
Contract Law: Text, Cases, and Materials provides a complete guide to the subject of contract law. The book comprises a balance of 60 per cent text to 40 per cent cases and materials. Its clear explanations and analyses of the law provide support to students, while the extracts from cases and materials promote the development of essential case reading skills and allow for a more detailed appreciation of the practical workings of the law and of the best legal scholarship. Part I of the book examines the rules relating to the existence of an agreement (particularly offer and acceptance, uncertain and incomplete agreements, and consideration and promissory estoppel). Part II covers the terms of the contract, including implied terms, interpretation, boilerplate clauses, exclusion clauses, unfair terms in consumer contracts, and good faith. Part III examines topics such as mistake, misrepresentation, duress, undue influence, unconscionability, inequality of bargaining power, and frustration and force majeure. Part IV turns to breaches of contract and termination, damages, and specific performance. The last part, Part V, concentrates on third parties.

Chapter

Cover Contract Law

4. Privity  

Can a contract alter the rights and liabilities of a third party who is not privy to the contract? This chapter addresses the following questions: (1) Why is the general rule that only contract parties can sue on a contract? (2) What rights of enforcement does the Contract (Rights of Third Parties) Act 1999 confer on a third party? (3) What is the impact of the 1999 Act on the requirement that a contract claimant must have given consideration? (4) To what extent can a promisee enforce a contract for the benefit of a third party? (5) Aside from the 1999 Act, what legal avenues exist for third parties to enforce promises made for their benefit? (6) When and how does a contract bind third parties?

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 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.

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 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 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 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.

Book

Cover Poole's Textbook on Contract Law

Robert Merkin KC and Séverine Saintier

Course-focused and comprehensive, Poole’s Textbook on Contract Law provides an accessible overview of the key areas on the law curriculum. This book has been guiding students through contract law for many years. It places the law of contract clearly within its wider context, including the growing distinction between commercial and consumer contracting, before proceeding to provide detailed yet accessible treatment of all the key areas encountered when studying contract law. Part 1 considers formation, looking in detail at agreement, certainty and agreement mistakes, the enforceability of promises and the intention to be legally bound. Part 2 looks at content, interpretation, exemption clauses and unfair terms, performance, and breach. Part 3 considers the enforcement of contractual obligations, including remedies, detailed treatment of damages for breach of contract, privity and third party rights, and discharge by frustration. Part 4 looks at methods of policing the making of a contract, such as non-agreement mistakes which render the contract void, misrepresentation, duress, undue influence, unconscionable bargains, and illegality. The book also includes references to relevant EU consumer legislation and introduces students to the various attempts (international and European) to produce a harmonized set of contract principles.

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 Complete Contract Law

15. Undue Influence, Unconscionability, and Equality of Bargaining Power  

This chapter examines undue influence, which is largely about pressure and influence arising from a relationship. It begins with the basic role of the law on undue influence before moving to the substantive case law. The case law is divided into three categories, which are based on the different ways of proving undue influence. The first relates to what is known as ‘actual undue influence’, which is where a complainant proves undue influence. The second is where undue influence between two parties can be presumed from the circumstances. The third category has been a major problem in modern cases and it involves undue influence coming from a third party. The chapter then turns to the wider issues that complete the ‘bigger picture’. The first of these is the area often referred to as ‘unconscionability’, which is about the exploitation of weakness. The second is the attempt to create a wider ‘inequality of bargaining power’ principle. Finally, the chapter looks at the Consumer Protection from Unfair Trading Practices Regulations 2008, which can cover conduct otherwise classed as duress, undue influence, and harassment.

Chapter

Cover Essential Cases: Contract Law

Dickinson v Dodds (1876) 2 Ch D 463  

Essential Cases: Contract Law provides a bridge between course textbooks and key case judgments. This case document summarizes the facts and decision in Dickinson v Dodds (1876) 2 Ch D 463. The document also includes supporting commentary from author Nicola Jackson.