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Law Notes Contract Law Notes

Privity Notes

Updated Privity Notes

Contract Law Notes

Contract Law

Approximately 1511 pages

Contract law notes fully updated for recent exams at Oxford and Cambridge. These notes cover all the LLB contract law cases and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Hong Kong or Malaysia (University of London).

These were the best Contract Law notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LLB samples from outstanding law students with the highest...

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Table of Contents

I - Passing a Benefit to a Third Party 4

A - The Third Party’s Rights (The General Rule) 4

|*Tweddle v Atkinson (1861) 1 B&S 393 4

|*Dunlop Pneumatic Tyre Co Ltd v Selfridge [1915] AC 847 4

|Smith & Snipes Hall Farm Ltd v River Douglas Catchment Bd [1949] 2 KB 500 (Lord Denning only) 5

|*Scruttons Ltd v. Midland Silicones Ltd [1962] A.C. 446 5

B - The Promisee’s Remedies in a Contract for the Benefit of a Third Party 6

1/ Specific Performance 7

|*Beswick v Beswick [1968] AC 58 7

2/ Stay of Proceedings 8

|Gore v Van der Lann [1967] 2 QB 31 9

|Snelling v Snelling [1973] QB 87 9

3/ Damages 9

a/ Damages for the promisee’s own loss (YES) 9

b/ Damages for the third party’s loss 9

i/ General rule = no recovery 9

|*Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518 9

|*Jackson v Horizon Holidays [1975] 1 WLR 1468 10

|*Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR 277 10

ii/ Exceptions 11

I – Contracting out of the general rule (no?) 11

II – The Albazero Exception 11

|The Albazero [1977] A.C. 774 (esp Lord Diplock) 11

|*Linden Gardens Trust Ltd v. Lenestra Sludge Disposals [1994] 1 A.C. 85 11

|NOTE Wallace (1994) 110 L.Q.R. 42 12

|NOTE Cartwright, “Remedies in Respect of Defective Buildings after Linden Gardens”, (1993) 9 Con. L.J. 281 13

|*Darlington Borough Council v. Wiltshier Northern Ltd [1995] 3 All E.R. 895 15

|*McAlpine v. Panatown [2001] 1 AC 518 15

|NOTE Burrows, "No Damages for a Third Party's Loss" (2001) Ox Univ Commonwealth LJ 107 15

|NOTE Coote, “The Performance Interest, Panatown and the Problem of Loss” (2001) 117 LQR 81 16

C – Exceptions to Privity 16

1/ Collateral Contracts 16

|Shanklin Pier v Detel (1951, KBD) 16

2/ Agency 16

3/ Assignment 17

4/ Trust of the Promise 17

|Les Affreteurs Societe Anonyme v Leopold Walford (London) Ltd [1919] AC 801 18

|Re Schebsman [1944] Ch. 83, 89-90, 100-104 18

|Trident General Insurance v. McNiece Bros. (1988) 80 A.L.R. 574 (minority) 18

5/ General statutory exceptions 19

6/ Covenants concerning land 19

7/ Tort of Negligence 19

|Junior Books v Veitchi (1983, HL) 19

|*White v Jones [1995] 2 AC 207 19

8/ The Eurymedon Exception (Third Party ENforcement of Exclusion Clauses) 19

a/ Can a third party take the benefit of an exclusion clause in a contract to which he is not a party? 19

|The Mahkutai [1996] 3 WLR 1 (PC) 19

|*The Eurymedon [1975] AC 154 (unilateral contract) 21

|The New York Star [1981] 1 WLR 138 (Barwick CJ’s bilateral contract analysis) 21

|The Starsin [2003] 2 WLR 711, paras 93, 149-153, 196-197 22

|London Drugs Ltd v Kuehne & Nagel International (1993) 97 DLR (4th) 261 (Canadian Supreme Court) 23

|Norwich CC v Harvey [1989] 1 All ER 1180 23

b/ Can a party to a contract rely on an exclusion clause against a third party who is not a party to the contract? 24

9/ Negotiable Instruments 24

D – Reform leading to the 1999 Act 24

1/ Case for and against reform 24

a/ The Law Commission’s Report and Stevens’ Response 24

|*Law Commission Report No 242 24

|R Stevens, “The Contracts (Rights of Third Parties) Act 1999” (2004) 120 LQR 292 25

b/ Main arguments that justice requires not giving third party right to sue 25

i/ The third party is not a promisee 25

|S Smith, “Contracts for the Benefit of Third Parties: in Defence of the Third Party Rule” (1997) 17 OJLS 643 25

ii/ The third party has not provided any consideration 25

|Kincaid, “Third Parties: Rationalising a Right to Sue” (1989) 25

2/Contracts (Rights of Third Parties) Act 1999 26

|*Contracts (Rights of Third Parties) Act 1999 26

|A Burrows, “Contracts (Rights of Third Parties) Act 1999 and its implications for Commercial Contracts” [2000] LMCLQ 540 28

a/ Two cases where 1(1)(b) was satisfied 29

|Nisshin Shipping Co Ltd v Cleaves & Co Ltd [2004] 1 Lloyd’s Rep 38 29

|The Laemthong Glory (No 2) [2005] EWCA Civ 519, [2005] 1 Lloyd’s Rep 688 29

b/ One case where it failed 30

|Dolphin Maritime & Aviation Services Ltd v Sveriges Angfartygs Assurans Forening [2009] EWHC 716 (Comm); [2009] 2 Lloyd’s Rep 123 30

3/ Nature of the third party’s right under the Act 30

II - The Imposition of Burdens on Third Parties 30

A - Agency 30

B - Restrictive Covenants Concerning Land 31

C - Statutory Exceptions 31

D – Bailment on terms 31

|Morris v Martin [1965] 2 All ER 725 31

|*The Pioneer Container [1994] 2 All ER 250 31

E - Tortious Interference with Contract 31

F - Burden Running with Goods 31

|*The Strathcona [1926] AC 108 31

|*Port Line v Ben Line [1958] 2 QB 146 32

|NOTE Wade [1958] C.L.J. 169 32

|Swiss Bank Corp v Lloyds Bank [1979] 3 WLR 201, 221-227 32

|NOTE Tettenborn [1982] C.L.J. 58 34

|Law Debenture Corp v Ural Caspian Oil [1995] Ch 152 34

III - Commentary 34

|B Coote, “Consideration and the Joint Promisee” [1978] CLJ 301 34

|R Flannigan, “Privity – The End of an Era (Error)” (1987) 103 LQR 564 35

|C MacMillan, “A Birthday Present for Lord Denning: The Contracts (RTP) Act 1999” (2000) 63 MLR 721 36

Beale “A Review of the Contracts (Rights of Third Parties) Act 1999” inBurrows and Peel Contract Formation and Parties (OUP 2010) 36

IV – Questions 36


I - Passing a Benefit to a Third Party

A - The Third Party’s Rights (The General Rule)

The rule wasn’t clearly established until 19C (Price v Easton, Tweddle v Atkinson):

|*Tweddle v Atkinson (1861) 1 B&S 393

  • Facts: C married the promisor’s daughter. Prior to the wedding the promisor entered into an agreement with C’s father where they each promised to give C money, with a clause in the contract stipulating that C “has full power to sue the said parties in any Court of law or equity for the aforesaid sums”. The promisor failed to pay and C sued.

  • Held (QBD): The claim failed –

    • it is now established that no stranger to the consideration can take advantage of a contract, although made for his benefit” (Wightman J).

    • Consideration must move from the party entitled to sue upon the contract” because it would be “monstrous” to allow someone to sue for his own...

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