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.
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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.
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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.
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A contract alters the rights and liabilities of the contract parties: they are said to be privy to the contract. But what about someone who is not a contract party (a ‘third party’)? This chapter addresses the following questions: (1) What are the justifications for 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 Contract (Rights of Third Parties) Act 1999, what legal avenues exist for third parties to enforce promises made for their benefit? (6) When and how does a contract bind third parties?
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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?
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Celebrated for their conceptual clarity, titles in the Clarendon Law Series offer concise, accessible overviews of major fields of law and legal thought. A mortgage is what is given in exchange for the loan. It is a property right, given to the building society or other lender, which makes the house owner liable and available to pay a loan used for the purchase of land. There are different kinds of mortgage, depending upon their purpose and the way they are repaid. These include acquisition mortgage, post-acquisition mortgage, repayment mortgage, and interest-only mortgage. This chapter discusses the mechanics of mortgages; rights, remedies, and protections in the mortgage relationship; third parties and the protection of mortgagees; and joint mortgagors and the problem of pressure.
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This chapter discusses the scope of the Civil Partnership Act 2004 (CPA 2004) which came into force on 5 December 2005 and the formation of civil partnerships. It outlines civil partnership and same-sex marriage under The Marriage (Same-Sex Couples) Act 2013. It also explains the differences between civil partnership and marriage. Once a partnership has been formed, civil partners assume many legal rights and responsibilities for each other, third parties, and the State. It does explain that adultery, however, is not a fact to establish the ground for dissolution of a civil partnership as it is in marriage. The Civil Partnership (Opposite-sex Couples) Regulations 2019 are also outlined.
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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.
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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.
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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.
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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 covers the statutory exception to privity provided in the Contracts (Rights of Third Parties) Act 1999.
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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.
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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.
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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.
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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.
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Land is an important commodity in society that it is both permanent and indestructible, two features which distinguish it from other forms of property. More than one person can have a relationship with the land and share the right to possess it. The right to possess a land is known as ownership right, but it is also common for people to have enforceable rights in other people’s land. This is a third-party right, an example of which is where the owner of a house in a residential area agrees with neighbours that the house will only be used as a residence. This chapter discusses land and property rights, ownership rights, third-party rights, and conveyancing. It also examines the distinction in English law between real property and personal property, the meaning of land, items attached to the land, fixtures and fittings, and incorporeal hereditaments.
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Land is an important commodity in society that it is both permanent and indestructible, two features which distinguish it from other forms of property. More than one person can have a relationship with the land and share the right to possess it. The right to possess a land is known as ownership right, but it is also common for people to have enforceable rights in other people’s land. This is the third party right, an example of which is where the owner of a house in a residential area agrees with neighbours that the house will only be used as a residence. This chapter discusses land and property rights, ownership rights, third party rights, and conveyancing. It also examines the distinction in English law between real property and personal property, the meaning of land, items attached to the land, fixtures and fittings, and incorporeal hereditaments.
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Paul S. Davies
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.
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This chapter focuses on unregistered land. Unregistered land continues to play a residual (if diminishing) role in contemporary land law. Although its influence is dwindling, there will remain a core clutch of land for which, for the foreseeable future, there will be no trigger for compulsory land registration and it will therefore remain unregistered. An appreciation of the principles of unregistered land gives students better insight into and a more informed angle on the principles of registered land and their effectiveness. Almost 100 years after the 1925 raft of legislation, much of which was designed to facilitate land registration, unregistered land principles therefore retain a significance. The chapter considers how dealings with unregistered land known as ‘title deeds conveyancing’ operate.
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The Concentrate Questions and Answers series offers the best preparation for tackling exam questions. Each book includes typical questions, bullet-pointed answer plans and suggested answers, author commentary, and illustrative diagrams and flowcharts. This chapter looks at transfer of title and third-party rights, including legal and equitable interests; registered land and the Land Registration Act (LRA) 2002; unregistered land and the Land Charges Act (LCA) 1925; and the protection of third-party rights.
