OCR A Level Law - Contract: Privity

Definition of Privity

the idea that only a person who is party to a contract is bound by it and can benefit from it

Dunlop v Selfridge

Dunlop could not sue when selfridge sold tyres at a lower price than agreed between Dunlop and Dew as they were not a party to the contract between Dew and Selfridge

Jackson v Horizon Holidays

Certain circumstances, courts try to avoid strict rule of privity by allowing damages for distress to others despite not being a party to the contract.

Agency

an agent is authorised to make a conteact on behlaf of another person.

Collateral contracts

A second contract that runs alongside the main agreement

Shanklin Pier v Detel Products

The owners of the pier could sue the manufacturers of the paint, even though the paint was bought by the painters, because the manufactures assurance about the paint lasting for 7 to 10 years made this a collateral contract.

Tulk v Moxhay

One who purchases property with knowledge of restrictive covenants burdening the land must honor the covenant.

Restrictive Covenants

A statement written into a property deed that restricts the use of the land in some way; often used to prohibit certain groups of people from buying property.

Contract (Rights of Third Parties) Act 1999

Allows third parties to enforce contract terms.

1 (1) a CRTPA

a third party can enforce a contract if the contract expressly provides that they may.

1 (1) b CRTPA

a third party can enforce a contract if the contract or a term purports to confer a benefit on them.

Nisshin Shipping v Cleaves

Cleaves could enforce the contract under C(RTP) Act 1999 because the contract conferred a benefit on him

Section 1 (2) CRTPA

statute will not apply where it appears the parties did not intend the term to be enforceable by the third party - the rights of third parties can be expressley excluded

Section 2

where a third party has a right to enforce a term under section 1 the parties to the contract may not rescind or vary the contract to alter or remove those rights without his consent if -

Section 2 (a)

the third party has communicated his assent to the term

Section 2 (b)

the promisor is aware that the third party has relied on th term

Section 2 (c)

the promisor can reasonably be expected to have forseen that the third party would rely on the term