ABSTRACT
Introduction The doctrine of privity of contract is related to the issues of the creation of contractual obligations looked at in Chapters 1 and 2, in that it is concerned with the question of who has rights and liabilities under a contract. It is sometimes argued that some aspects of the doctrine are just another way of stating the rule that consideration must move from the promisee, and so questions may sometimes involve looking at both consideration and privity issues. More commonly, in the past, questions have tended to relate to the two sides of the basic privity doctrine, that is: • that a person cannot sue on a contract made for their benefit if they were not
a party to it; and • that a person cannot have obligations imposed on them by a contract to
which they are not a party. The first part of the doctrine, relating to the conferring of benefits, was the subject of major reform in the Contracts (Rights of Third Parties) Act 1999. This Act was based on the recommendations of the Law Commission Report No 242, Privity of Contract: Contracts for the Benefit of Third Parties (Cmnd 3329), and applies to contracts made on or after 11 May 2000. Although the old law may still be applicable to some contracts, most questions on privity will now require you to show an understanding of the new legislation. You may well be asked, however, whether the reform is satisfactory, and this will also require knowledge of the previous law. All the questions and answers in this chapter touch on one or more aspects of the new legislation.
