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Contract: Formation

Privity of contract and the Contracts (Rights of Third Parties) Act 1999

  • 3 things to know
  • A2 Units 3 and 4

Overview

Doctrine of privity of contract and principal criticism of the strict doctrine of privity.

What you need to know

Answer each one before you reveal it.

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Key term

State the doctrine of privity of contract.

Key term

How must a third party be identified if they are to enforce a term under the Act of 1999?

Key term

What restriction does section 2 of the Contracts (Rights of Third Parties) Act 1999 place on the contracting parties?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    State the doctrine of privity of contract.

    Model answer

    Only the parties to a contract are bound by it, and only the parties to it may sue on it, so a person who is not a party acquires no rights and incurs no obligations under it at common law.

  2. 2

    What did Dunlop Pneumatic Tyre v Selfridge (1915) decide about privity?

    Model answer

    It decided that the tyre manufacturer could not enforce a minimum resale price against a retailer with whom it had no contract, because only a party who has given consideration under the agreement can sue on it.

  3. 3

    What did Tweddle v Atkinson (1861) decide?

    Model answer

    It decided that a bridegroom could not enforce an agreement between his father and his father in law to pay him a sum on his marriage, because he was a stranger to that agreement and gave no consideration for it.

  4. 4

    How did the widow succeed in Beswick v Beswick (1968) despite the privity rule?

    Model answer

    She could not sue in her personal capacity because she was not a party, but as administratrix of her husband's estate she stood in his shoes and obtained specific performance of the promise to pay her the annuity.

  5. 5

    State the principal criticism of the strict doctrine of privity.

    Model answer

    It defeats the intention of the contracting parties, since a promise deliberately made for the benefit of a named third party could not be enforced by the only person who suffered from its breach.

  6. 6

    How does a collateral contract avoid the privity rule?

    Model answer

    A separate contract is found between the promisor and the third party, supported by that party's own consideration, as in Shanklin Pier v Detel Products (1951) where a paint manufacturer's assurance about durability was enforceable by the pier owner who specified the paint.

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