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Contract: Essential Requirements and Formation

Privity of contract and third party rights

  • 3 things to know
  • Components 2 and 3

Overview

Basic rule of privity of contract and two other established exceptions to privity.

What you need to know

Answer each one before you reveal it.

Your recallNot started
Key term

State the basic rule of privity of contract.

Numbers

Which case is the leading authority on privity?

Numbers

How does privity relate to the rule that consideration must move from the promisee?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    State the basic rule of privity of contract.

    Model answer

    Privity means that only a party to a contract can sue or be sued on it. A stranger to the agreement acquires no rights under it at common law.

  2. 2

    Which case is the leading authority on privity?

    Model answer

    Dunlop Pneumatic Tyre Co v Selfridge [1915] held that Dunlop could not enforce a resale price term. Dunlop was not a party to the contract between the dealer and Selfridge.

  3. 3

    How does privity relate to the rule that consideration must move from the promisee?

    Model answer

    Tweddle v Atkinson (1861) failed both because the groom was not a party and because he gave nothing. The two rules often defeat the same claim for different reasons.

  4. 4

    How did the widow succeed in Beswick v Beswick [1968]?

    Model answer

    Beswick v Beswick [1968] concerned a promise to pay an annuity to the seller's widow. The widow succeeded as administratrix of her husband's estate and obtained specific performance.

  5. 5

    What did Jackson v Horizon Holidays [1975] allow?

    Model answer

    Jackson v Horizon Holidays [1975] allowed a father to recover damages covering his family's disappointment on a ruined holiday. The contract had been made for the benefit of the whole family.

  6. 6

    How did the House of Lords react to Jackson v Horizon Holidays?

    Model answer

    Woodar Investment Development v Wimpey Construction [1980] doubted any general right to recover a third party's loss. The House of Lords treated the holiday case as a special situation.

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