bits of law
Contract | Formation
Revision Note | Degree
bits of law
- 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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