Introduction

• 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

  Tweddle v Atkinson (1861) 1 B & S 393

  Facts:

  • 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

  Issue:

  • could P, a third party, sue D?

  Held:

  • 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

  Contracts (Rights of Third Parties) Act 1999

  • S1: statutory right for third parties to take advantage of contractual promises, where made for their benefit