Privity

Abstract

The doctrine of privity of contract consists of two distinct general rules. The first is that a third party cannot be subjected to a burden by a contract to which he is not a party. The second is that a person who is not a party to a contract cannot claim the benefit of it, even though the contract was entered into with the object of benefiting that third party. The former rule is not at all controversial: it would be wholly unreasonable for a legal system to enable two parties to subject a third party to a contractual obligation of which he was completely unaware. The second rule is, however, extremely controversial and the Law Commission has recently recommended (1996) that it be reformed so as to enable contracting parties to confer a right to enforce the contract on a third party. It is the latter aspect of privity which will form the principal subjectmatter of this chapter and any discussion of the reform of privity is confined exclusively to this limb of the doctrine.