The Privity of Contract - Chen Wishart Chapter 4
Two Rules at Common Law;
1) only a person who is a party to a contract can sue on it;
2) only a person who has given consideration may enforce a contract not under seal.
So What?:
A real problem, because;
1. Even if a contract party wanted the third party to benefit from the contract, the contract
party has not suffered a loss themselves, so cannot recover damages from the contract party
in breach.
2. The third party cannot sue because they are not a party to the contract.
Tweddle V Atkinson
H & W married and afterwards a contract was made between H’s father and W’s father that
each should pay to H a sum of money and that H should have power to sue.
- Held: H had given no consideration for the promises and could not enforce the
contract.
Dunlop V Selfidge
Dunlop sold tyres to Dew & Co on terms that Dew & Co would not re-sell them below a fixed
price.
Dew sold the tyres to Selfridge who agreed with Dew & Co to abide by the same terms.
S then sold tyres below the fixed price.
Dunlop sued S to enforce the agreement.
What are the Law Commission’s Key Aims?
Act of Parliament;
Contracts (Rights of Third Parties) Act 1999
Two Rules at Common Law;
1) only a person who is a party to a contract can sue on it;
2) only a person who has given consideration may enforce a contract not under seal.
So What?:
A real problem, because;
1. Even if a contract party wanted the third party to benefit from the contract, the contract
party has not suffered a loss themselves, so cannot recover damages from the contract party
in breach.
2. The third party cannot sue because they are not a party to the contract.
Tweddle V Atkinson
H & W married and afterwards a contract was made between H’s father and W’s father that
each should pay to H a sum of money and that H should have power to sue.
- Held: H had given no consideration for the promises and could not enforce the
contract.
Dunlop V Selfidge
Dunlop sold tyres to Dew & Co on terms that Dew & Co would not re-sell them below a fixed
price.
Dew sold the tyres to Selfridge who agreed with Dew & Co to abide by the same terms.
S then sold tyres below the fixed price.
Dunlop sued S to enforce the agreement.
What are the Law Commission’s Key Aims?
Act of Parliament;
Contracts (Rights of Third Parties) Act 1999
