12. Third Party Rights (the Doctrine of Privity)

2021 ◽  
pp. 377-412
Author(s):  
André Naidoo
Keyword(s):  
Common Law ◽  
Case Law ◽  
Third Parties ◽  
Third Party ◽  
Commercial Importance ◽  
Starting Point ◽  
The Common ◽  
Privity Of Contract

This chapter highlights the doctrine of privity of contract; that means it is about the rights and obligations of third parties. The starting point is the basic common law rule of privity. At common law, third parties have no general right to enforce contracts made by others. Likewise, contracts made by others cannot impose obligations on third parties. This is a fairly straightforward principle and is based on sound reasons, but in practice privity has become a complex area. The existence of the rule resulted in a range of clever devices being developed to get around it, all of which are of commercial importance. And the rule against parties enforcing contracts made by others in particular was also severely criticized over the years for various reasons. The basis for such criticism resulted in some partial exceptions being developed in the case law, and ultimately in a statute—namely the Contracts (Rights of Third Parties) Act 1999. This complicates matters further because the Act only applies in certain circumstances and its application can be excluded by the terms of the contract. As such, there will be circumstances in which the common law exceptions and devices remain relevant, and they must therefore be studied alongside it.

7. Privity of contract and third party rights

2021 ◽  
pp. 307-358
Author(s):  
Robert Merkin ◽  
Séverine Saintier
Keyword(s):  
Common Law ◽  
Case Law ◽  
Contract Law ◽  
Third Parties ◽  
Third Party ◽  
The Third ◽  
The Subject ◽  
The Common ◽  
Contractual Obligations ◽  
Privity Of Contract

Poole’s Casebook on Contract Law provides a comprehensive selection of case law that addresses all aspects of the subject encountered on undergraduate courses. This chapter examines privity of contract, its relationship with consideration, and the ability of third parties to enforce contractual provisions for their benefit. The doctrine of privity of contract provides that the benefits of a contract can be enjoyed only by the parties to that contract and only parties can suffer the burdens of the contract. At common law, third party beneficiaries could not enforce a contractual provision in their favour so various devices were employed seeking to avoid privity. Statute now allows for direct third party enforcement but in limited circumstances. This chapter examines the background to privity and the attempted statutory reform in the Contracts (Rights of Third Parties) Act 1999 as it has been interpreted in the case law. The chapter also discusses the common law means of avoiding privity as illustrated by the case law, e.g. agency, collateral contracts, and trusts of contractual obligations. Finally, it assesses the remedies available to the contracting party to recover on behalf of the third party beneficiary of the promise, including the narrow and broad grounds in Linden Gardens Trust. It concludes by briefly considering privity and burdens—and the exceptional situations where a burden can be imposed on a person who is not a party to the contract.

11. Privity of contract and third party rights

2019 ◽  
pp. 519-570
Author(s):  
Robert Merkin ◽  
Séverine Saintier
Keyword(s):  
Common Law ◽  
Case Law ◽  
Third Parties ◽  
Third Party ◽  
The Third ◽  
The Subject ◽  
The Common ◽  
Contractual Obligations ◽  
Privity Of Contract ◽  
Selection Of

The Casebook series provides a comprehensive selection of case law that addresses all aspects of the subject encountered on undergraduate courses. This chapter examines privity of contract, its relationship with consideration, and the ability of third parties to enforce contractual provisions for their benefit. The doctrine of privity of contract provides that the benefits of a contract can be enjoyed only by the parties to that contract and only parties can suffer the burdens of the contract. At common law, third party beneficiaries could not enforce a contractual provision in their favour so various devices were employed seeking to avoid privity. Statute now allows for direct third party enforcement but in limited circumstances. This chapter examines the background to privity and the attempted statutory reform in the Contracts (Rights of Third Parties) Act 1999 as it has been interpreted in the case law. The chapter also discusses the common law means of avoiding privity as illustrated by the case law, e.g. agency, collateral contracts, and trusts of contractual obligations. Finally it assesses the remedies available to the contracting party to recover on behalf of the third party beneficiary of the promise, including the narrow and broad grounds in Linden Gardens Trust. It concludes by briefly considering privity and burdens—and the exceptional situations where a burden can be imposed on a person who is not a party to the contract.

Contracts for the Benefit of Third Parties: The Singapore Law Perspectives

2018 ◽  
Author(s):  
ONG Burton
Keyword(s):  
Common Law ◽  
Contract Law ◽  
Third Parties ◽  
Third Party ◽  
The Third ◽  
The Status ◽  
The Common ◽  
English Law ◽  
The Third Party ◽  
Privity Of Contract

Singapore’s contract law framework, in the context of third party beneficiaries, has stayed faithful to the approach taken under English law. The common law in Singapore has adopted the privity of contract rule, various common law exceptions to the rule, and a statutory regime to empower third parties to enforce contractual terms in prescribed circumstances. The privity rule confines the benefits and burdens under a contract to the contract parties; only they have given consideration and only they can sue and be sued under it. However, various reasons support the third party beneficiary having some right to enforce that benefit and a range of common law mechanisms have been recognized by the courts to allow the third party to do this. Some are true exceptions, others operate by recharacterizing the status of the third party into that of a primary party, thereby eliminating the lack of privity. In cases where the third party may potentially be able to sue the promisor in tort, the basis for loosening the privity doctrine to permit the third party to sue the promisor in contract, and the character of the damages recoverable from the party in breach, requires closer scrutiny.

4. Privity and third party rights

2021 ◽  
pp. 72-96
Author(s):  
Jill Poole ◽  
James Devenney ◽  
Adam Shaw-Mellors
Keyword(s):  
Common Law ◽  
Third Parties ◽  
Third Party ◽  
Essential Information ◽  
Privity Of Contract

Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter discusses the doctrine of privity and third party rights. The doctrine of privity of contract provides that a person who is not a party to a contract (called a ‘third party’), cannot acquire rights under or enforce the provisions of that contract or rely on its protections even if the provisions were intended to benefit that third party. At common law there are complex, and sometimes artificial, ways to avoid this conclusion. More significant nowadays is the attempt to reform this principle by legislation in the Contracts (Rights of Third Parties) Act 1999, allowing some third party beneficiaries to enforce the provisions of contracts.

3. Special duty problems: omissions and acts of third parties

2019 ◽  
pp. 49-59
Author(s):  
Kirsty Horsey ◽  
Erika Rackley
Keyword(s):  
Common Law ◽  
Third Parties ◽  
Third Party ◽  
Duty Of Care ◽  
The Third ◽  
The Common ◽  
Relationship Of ◽  
Special Duty

This chapter discusses the problem of when a duty of care arises in respect of negligent omissions, or for the actions of a third party. The common law takes the view that it would be too great a burden to impose liability upon a person for a mere omission, or for the actions of others. Despite this, duties can in fact be imposed in various ways, all of which focus on the reliance of the claimant upon the defendant. This can come about either by the previous conduct of the defendant, which induces reliance by the claimant that the defendant will continue to act in that way, or by reliance which comes out of a relationship of dependence between the parties. As regards third parties, a duty may arise where the defendant has control over or responsibility for the third party’s actions.

Conditions in Favour of Third Parties

1952 ◽  
Vol 11 (2) ◽  
pp. 240-257
Author(s):  
T. C. Thomas
Keyword(s):  
Common Law ◽  
Third Parties ◽  
Third Party ◽  
The Third ◽  
The Common ◽  
The Law ◽  
The Third Party

The purpose of this article is to consider the legal effects of a transfer of property by A to B subject to the performance by B of some obligation in favour of C, a third party to the transfer. The student of the law of contract is well familiar with the common law rule that no one who was not an original party to the contract is entitled to the benefit of that contract. But this rule creates hardship in particular cases and it has been shown that, in the main, three methods have been evolved to evade those unfortunate results. First, the legislature has intervened and provided C, the third party, with statutory rights. Secondly, the doctrine of agency has been invoked whereby C may claim that he is the principal of B. Thirdly, but with varying success, the trust concept has been pressed into service whereby C has sometimes been able to show that he is a beneficiary.

Contracts for the Benefit of Third Parties in Malaysia

2018 ◽  
Author(s):  
David Fung
Keyword(s):  
Property Rights ◽  
Subject Matter ◽  
Common Law ◽  
Third Parties ◽  
Third Party ◽  
Privy Council ◽  
The Common ◽  
Clear Statement

This chapter examines the Malaysian position on privity and third party beneficiaries. Given that the Malaysian Contracts Act 1950 (‘MCA 1950’) is virtually a copy of the Indian Contract Act 1872, the issues are, unsurprisingly, similar. The absence of a clear statement of the rule in the MCA 1950 meant that its existence was susceptible to challenge. It was only in Kepong Prospecting Ltd v Schmidt, when the Privy Council pronounced on the fundamentality of the privity rule, that the matter was finally settled. This chapter demonstrates the ingenuity and the limitations of the common law. The strategy of finding an express trust of a promise finds a familiar trajectory in the use of that strategy in England. The need to prove the three certainties of intention to create a trust, beneficiaries, and subject matter emphasizes the clear intention to create property rights. An alternative explored by the author relates to the institutional constructive trust which requires a proprietary base by which the constructive trust may be found.

10. Third parties

2018 ◽  
Author(s):  
Paul S. Davies
Keyword(s):  
Common Law ◽  
Third Parties ◽  
Third Party ◽  
Relevant Term ◽  
The Common

This chapter considers two principal questions: firstly, may a person who is not a party to a contract acquire rights under it? Secondly, can a contract impose duties on a person who is not a party to it? With some exceptions, the common law answered ‘No’ to both. A contract between A and B cannot be enforced by a third party, C, even if the contract is for the benefit of C. Nor can a contract between A and B impose burdens on C. Following the Contracts (Rights of Third Parties) Act 1999 there is now a statutory exception to the principle that C acquires no rights under a contract between A and B. Under this Act, a third party might be able to enforce a term of the contract if the contract expressly provides that he may, or if the relevant term purports to confer a benefit on him.

4. Privity and third party rights

2019 ◽  
pp. 77-101
Author(s):  
Jill Poole ◽  
James Devenney ◽  
Adam Shaw-Mellors
Keyword(s):  
Common Law ◽  
Third Parties ◽  
Third Party ◽  
Essential Information ◽  
Privity Of Contract

Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter discusses the doctrine of privity and third party rights. The doctrine of privity of contract provides that a person who is not a party to a contract (called a ‘third party’), cannot acquire rights under or enforce the provisions of that contract or rely on its protections even if the provisions were intended to benefit that third party. At common law there are complex, and sometimes artificial, ways to avoid this conclusion. More significant nowadays is the attempt to reform this principle by legislation in the Contracts (Rights of Third Parties) Act 1999, allowing some third party beneficiaries to enforce the provisions of contracts.

21. Third Parties

2020 ◽  
pp. 613-660
Author(s):  
Jack Beatson ◽  
Andrew Burrows ◽  
John Cartwright
Keyword(s):  
Common Law ◽  
General Rule ◽  
Third Parties ◽  
Third Party ◽  
Privity Of Contract

This Chapter deals with the scope of a valid contract when formed, and the question: to whom does the obligation extend? This question is considered under two separate headings: (1) the acquisition of rights by a third party, and (2) the imposition of liabilities upon a third party. At common law the general rule is that no one but the parties to a contract can be entitled under it, or bound by it. This principle is known as that of privity of contract.

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