Privity

Privity

1. Dunlop Pneumatic Tyre Co v Selfridges & Co = 'Only a person who is a party to a contract can sue on it'

2. Has 2 aspects to it:

   • Who are the parties to the agreement?
   • Has the claimant provided consideration?

3. Collateral Contracts

   • Shanklin Pier v Detel Products = Consideration was the instruction given by the claimants to their contractors
   • Contract between 2 persons (A and B) may be accompanied by a collateral contract between one of them ( eg B) and a 3rd party.
   • Independent Authority v EMI Electronics = Promise won't amount to a collateral contract unless an intention established

4. Clarke v Dunraven = Where group of people join a club/competition, may deemed to be entering into a contract with all other members to abide by rules of club/competition

5. Consideration Component

   • 1. Tweddle v Atkinson = Consideration must move from promisee
   • 2. Dunlop Pneumatic Tyre Co v Selfridge & Co = Claimant must show promise was made to him & consideration moved to him

6. Justifications for Privity

   • Tweddle v Atkinson = Doctrine rests on principle of mutuality e.g. unfair to allow a person to sue a contract where that person cannot be sued by the other
   • Re Schedsman = Undesirable for 3rd party rights to be created by a contract. Restricting rights to amend/rescind their agreement
   • Third-party beneficiaries are gratuitous recipients of the benefit in their favour

7. Contracts (Rights of Third Parties) Act

   • S.1 (1) - A person who is not a party to a contract may enforce a term if test of enforceability is satisfied
   • 2 ways in which the test of enforceability can be satisfied:
     • 1. S.1 (1) a - Contract expressly states that a 3rd party has right to enforce provision
     • 2. S.1 a & b - 3rd Party can enforce if expressly identified in contract & the term purports to confer a benefit on that third party
       • Dolphin & Maritime & Aviation Services v The Swedish Club = Won't apply in the construction of contract where parties didn't intend term to be enforceable by the 3rd party
         • Nisshin Shipping Co v Cleaves & Co = Burden on promisor to rebut presumption