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Law Notes Contract Law Notes

What Is The Privity Doctrine Notes

Updated What Is The Privity Doctrine Notes

Contract Law Notes

Contract Law

Approximately 1511 pages

From the AuthorContract 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 ...

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The Privity Doctrine

What is the Privity doctrine?

  • No third party can enforce a contract for which they do not give consideration

    • 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.

        • Father of bride failed to pay 200

        • Blackman J: No third party as stranger to the consideration

          • can act upon a contract,

            • even if made for his benefit.

  • Whether the contract is made for the third party’s benefit

    • Dunlop Pneumatic Tyre Co Ltd v Selfridge [1915] Dunlop insisted that if dealer sold their tyres below list price, Dealer would have to pay 5 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.

      • Viscount Haldane LC:

        • 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

            • Dunlop fails on both these points.

      • Lord Dunedin:

        • 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.

    • Beswick v Beswick [1968]:Old B transferred coal business to D (nephew) on the understanding that he would pay 5 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 1000

        • General view at the moment = X could not sue for 1000

        • Law Revision Committee said that should be enforceable where benefit conferred to third party

          • 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

    • 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

        • That stranger to contract cannot take advantage of the provisions of the contract

          • even when it is clear from the contract that some provision was intended to benefit him.

        • Denning LJ (dissenting) in Smith and Snipes v River Douglas Catchment Board [1949]

          • A man who makes a deliberate promise which is intended to be binding

            • Must either keep his promise or be forced to do so by the Courts.

              • And keep it not only to those who give consideration but also a suit to one who was not a party to the contract

Justifications for Doctrine

  • Prevents enforceable burdens being placed on third parties without consent

    • If A contracts with V that C will do something

      • C will generally not be bound to do that thing

        • Burrows: burden should not be imposed by contract unless party has agreed to that burden.

          • Otherwise undermines autonomy of people to agree to what they want to contract into, and not contract into what they don’t.

    • Problem

      • Also prevents third parties from enforcing benefits that have been arranged for them

        • Burrows: no conception of destroying liberty here

          • b/c A and V have already voluntarily taken on the burden

            • so why shouldn...

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