bits of law

Main Section

Contract | Formation

Consideration: Privity

Revision Note | Degree

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  • privity means that only parties to a contract can sue or be sued on promises in it
  • general rule: a thrid party cannot derive benefit from nor be subject to obligations imposed
  • problems arise in cases where a contract is specifically intended to benefit a third party


    • plaintiff (P) was getting married and P's father & father in law the defendant (D) agreed pay P (marriage settlement)
    • P's father paid him £100 but D failed to pay £200 he had agreed


    • could P, a third party, sue D?


    • P not privy to the contract so could not sue
    • P's father, was privy to the contract & gave consideration (paying £100) not able to sue either because he had not suffered any personal loss
    • Wrightman J: .. it is now well established that at law no stranger to the consideration can take advantage of the contract though made for his benefit...
    • case widely viewed as unjust
    • S1: statutory right for third parties to take advantage of contractual promises, where made for their benefit
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