Privity of contract essay

Privity of contract essay

Essay and Problem Question on Privity of contract Essay Question: a) Are the circumstances where the law imposes the burden of a contract upon a third party5/5(10)  · This is referred to as Privity of contract. The Doctrine of Privity of Contract under English Law The doctrine of “Privity of Contract” which means that a contract is a contract between the parties only and no stranger to the contract can sue even if the contract is Doctrine of privity - contract cannot enforce liability or obligation nor can grant rights to any person who is not a party to the contract. Doctrine of privity has two basic ingredients Liability – parties cannot impose liability on the third party. In a contract between two parties third party cannot be made liable for liability arising out of their contract. Benefit- A stranger cannot claim for benefits arising out of the

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Inthe Law Commission published Privity of Contract: Contract for the Benefit of Third Parties. The proposals set out in this report were later legislated on the basis of, in the Contracts Rights of Third Parties Act The aim of this legislation was fundamentally to alter the law in relation to the concept of privity of contract, in order to grant third parties who were not parties to the original contract certain rights.

The doctrine of privity of contract will be considered, and the effect on this of the C RTP A will be analysed. Finally, some consideration will be given to the question of whether the legislation has gone far enough in reforming the law of privity.

It has historically been a fundamental and central principle of contract law in England and Wales that only the actual parties to a contract can have either contractual rights or duties conferred upon them. This was established at common law in the case of Tweddle v Atkinson The doctrine was confirmed in the early twentieth century in the case of Dunlop Pneumatic Tyre Co Ltd v Selfridge and Co Ltd It is important at the outset to distinguish the doctrine of privity of contract from the possibility of a third party enforcing a collateral contract.

These are quite distinct scenarios. Under the first historicallythe third party had no right to claim rights, nor to be held liable for the performance of contractual duties. In the second scenario, as was established at common law in the case of Shanklin Pier v Detel Products Ltdan actual contract might be found to exist between the third party and one of the parties to the contract, privity of contract essay.

It is the former of the two situations with which the C RTP A is concerned. The two interests as defined by McKendrick which a third party can have in a contract to which he is not a party are both whether or not he can acquire rights under that contract, and whether or not the contract in question can impose any liabilities or obligations on him. What, then, is the purpose of privity of contract? It is, rather obviously, to do with the perceived injustice of imposing rights or obligations as between two parties who have had no dealing, at least no contractual dealing.

It is clear that if X and Y enter a contractually binding agreement, Y has not made any agreement with Z, and therefore there is no rationale for entitling Z to take enforcement action against Y. The justification for the doctrine flows from the fact that contractual obligations, unlike tortious ones, are voluntary.

The opening quotation, taken from that report, explicitly seeks to limit the implications of the reforms that would later find their way into the C RTP Aand the privity of contract essay above of the centrality of the doctrine of privity to contract law generally, shows why these limitations were considered necessary, privity of contract essay. What is the impact on this doctrine privity of contract essay the C RTP A, and does this do enough to reform the law on privity?

The first concerns the issue of implied rights in contracts, brought into the contract by implied terms. It is considered that to limit third party rights is akin to restricting implied terms, privity of contract essay.

The same can apply to third parties. Do these two tests privity of contract essay the spirit of the opening quotation? It can certainly be seen how these two tests of enforceability have altered the doctrine of privity substantially, and in particular the second test of enforceability relating to implied third party rights. This balance can be seen to be aimed for by the existence of a rebuttable presumption of intention inherent in the second test of enforceability.

This rebuttable presumption attains a further balance, between a sufficient degree of certainty between contracting parties, and sufficient flexibility. This flexibility was required in order for the C RTP A to apply to the potentially huge range of contracts for which it was intended.

The balance can be seen to have been aimed for, at least, in the two tests of enforceability in the C RTP A An illustration privity of contract essay how the tests would be applied to decided cases is offered by Trietel, who identifies the case of Jackson v Horizon Holidays as falling within the scope of the second test under section 1 1 b. It is suggested by McKendrick that section 1 simply gives the contracting parties an incentive to make their intention clear, which, again, returns to the issue mentioned above about the need for well-drafted contracts.

The C RTP A is a highly significant piece of reform legislation, which fundamentally alters a central doctrine of English contract law. It can be seen to represent the superiority of the doctrine of freedom of contract over that of privity of contract. The significance of the Act is that while it maintains the previous exceptions to privity of contract, contracting parties will probably make increasing use of the Act rather than these, as a matter of certainty.

The effect of the Act is somewhat limited, privity of contract essay, however, by the continuing requirement of clarity in the construction of the contract, whereby a presumption of an intention to confer rights on a third party can be rebutted. The effect of this, however, privity of contract essay, is simply to encourage a clarity of intention on the part of the contracting parties. Burrows, A.

Law Commission Privity of Contract: Contract for the Benefit of Third Parties Law Comm Smith, S. Trietel, G. If privity of contract essay are the real writer of this essay and no longer want to have the essay published on the our website then please click on the link below to send us request removal:. Please provide details of your work and your ownership of it, if you don't provide any proof, your request will not be entertained.

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Privity of contract

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 · In , the Law Commission published Privity of Contract: Contract for the Benefit of Third Parties. The proposals set out in this report were later legislated on the basis of, in the Contracts (Rights of Third Parties) Act The aim of this legislation was fundamentally to alter the law in relation to the concept of privity of contract, in order to grant third parties who were not parties to the original Doctrine of privity - contract cannot enforce liability or obligation nor can grant rights to any person who is not a party to the contract. Doctrine of privity has two basic ingredients Liability – parties cannot impose liability on the third party. In a contract between two parties third party cannot be made liable for liability arising out of their contract. Benefit- A stranger cannot claim for benefits arising out of the  · Thus a contract can confer rights or impose obligations arising under the contract on the parties to the contract. Third parties cannot be under such an obligation to perform or demand erformance under a contract. This is referred to as Privity of contract. The Doctrine of Privity of Contract under English Law The doctrine of “Privity of Contract” which means that a contract is a Estimated Reading Time: 4 mins