ABSTRACT

A strict application of the doctrine of privity ignores the economic problem of externalities, namely that an arrangement between two people can affect a third party. Moreover, the doctrine, having been developed in the 19th century, is heavily influenced by market individualist theory, assuming that contracts are essentially bilateral arrangements. But this tends to ignore the value of co-operation that engenders a greater respect for the interests of others, including third parties. For this reason, various methods have been adopted to circumvent the unfortunate effects of a strict application of the doctrine and in other quarters the doctrine has been attacked on the basis that there is no doctrinal, logical or other policy reason to justify its existence.6 To say that a person cannot sue on a contract because he could not be sued is also misleading, since this is precisely the result achieved in cases involving unilateral contracts.