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What Is The Privity Doctrine Notes

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The Privity Doctrine What is the Privity doctrine?

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No third party can enforce a contract for which they do not give consideration o Tweddle v Atkinson (1861):
? Fathers of bride and groom on occasion of offspring's marriage, contracted with each other to pay a sum of money to the groom. Contract expressly stated that groom had power to sue either party for the sums specified.

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Father of bride failed to pay PS200

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Blackman J: No third party as stranger to the consideration o can act upon a contract,
? even if made for his benefit.

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Whether the contract is made for the third party's benefit o Dunlop Pneumatic Tyre Co Ltd v Selfridge [1915] Dunlop insisted that if dealer sold their tyres below list price, Dealer would have to pay PS5 in liquidated damages. Dealer made contract with S under same terms, as required to do so by contract with Dunlop, S sold tyres below list price. Dunlop sued S.

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Viscount Haldane LC: o Certain principles of English Law are fundamental:
? Only a person who is a party to a contract can sue on it
? And Consideration must support the contract

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Dunlop fails on both these points.

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Lord Dunedin: o Doctrine of consideration is stupid (as is Privity)
? Because it means agreements such as these, fairly made, can be terminated without loss to one party but potentially large loss for third party.

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o Beswick v Beswick [1968]:Old B transferred coal business to D (nephew) on the understanding that he would pay PS5 a week to widow of Uncle after Uncle dies. C sued in personal capacity of widow and also as the Administrix as Party B
? Lord Reid: sale contract that B agrees with A to pay X PS1000

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General view at the moment = X could not sue for PS1000

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Law Revision Committee said that should be enforceable where benefit conferred to third party o But this is not yet law, and unless Parliament continues to procrastinate, should not be altered by HoL. Or where third party tries to make use of an exclusion clause in original contract o Scruttons v Midland Silicones Ltd C owns drum of chemicals, enter into contract for carriage with X from USA to England. Term in the contract limited liability for loss or damage to the drum to $500. Goods were unloaded at England by D (stevedores) when D negligently damaged drum of chemicals. D attempted to limit liability to $500.
? Lord Reid: though I may regret it, I find it impossible through established rule

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