Privity of Contract and Third-Party Rights

Vocabulary flashcards covering the common law doctrine of privity, its various judicial exceptions, and the statutory reforms introduced by the Contracts (Rights of Third Parties) Act 1999.

Privity of Contract (General Rule)

The principle that anyone not ‘privy’ to a contract cannot sue or be sued under that contract.

Tweddle v Atkinson (1861)

A case establishing the link between consideration and privity; only a party who has provided consideration can enforce the contract.

Dunlop Pneumatic Tyre Co. Ltd v Selfridge [1915]

The case where Viscount Haldane LC identified the fundamental principles of privity, stating our law knows nothing of a 'jus quaesitum tertio' arising by way of contract.

Jus quaesitum tertio

A third-party right arising by way of contract, which English law traditionally does not recognize except as a right conferred by property such as a trust.

Jackson v Horizon Holidays (1975)

A case representing an exception to privity involving group contracts in social contexts where a party can recover damages on behalf of a third party.

Linden Gardens v Lenesta (1994)

A case providing an exception to privity for construction contracts where a subsequent purchaser is envisaged.

Beswick v Beswick (1968)

A case where a contracting party asked for an order of specific performance to obtain performance of the contract on behalf of a third party.

Collateral Contract

A contract existing alongside the main contract; it allows a party not in the main contract to take action if they sustain loss caused by a breach of that main contract.

Shanklin Pier v Detel Products (1951)

A case used to illustrate how the courts can imply a collateral contract to avoid the strict rules of privity.

White v Jones (1995)

A case demonstrating the use of negligence to recover losses when a contract was not properly performed, even for a non-party to the contract.

Contracts (Rights of Third Parties) Act 1999

Legislation that enables contracting parties to confer a legal right to enforce a contract on a third party, applying to most contracts made on or after 11 May 2000.

Section 1(1)(a) CRTPA 1999

The provision stating a third party may enforce a contract if the contract expressly provides that they may.

Section 1(1)(b) CRTPA 1999

The provision stating a third party may enforce a contract if the contract purports to confer a benefit on them, unless the parties did not intend it to be enforceable.

Section 1(3) CRTPA 1999

The requirement that a third party be expressly identified in the contract by name, as a member of a class, or as answering a particular description.

Avraamides v Colwill [2006]

A case where third-party rights were denied because no one was expressly identified in the contract regarding who payment should be made to.

Chudley v Clydesdale Bank Plc [2019]

A case where a reference to 'a client account' was deemed sufficient to identify a class for the purposes of the 1999 Act.

Section 2 CRTPA 1999

The section governing whether contracting parties can amend or rescind a contract that has granted rights to a third party.

Assent or Reliance

Conditions under Section 2 of the 1999 Act that prevent contracting parties from varying or rescinding a contract without the third party's consent.

Nisshin Shipping v Cleaves (2003)

Recognized as one of the first cases brought under the Contracts (Rights of Third Parties) Act 1999.