Parties to Contract

Introduction

**Privity of contract** is a doctrine of fundamental importance to the English law of obligations: **only the parties to a contract may sue or be sued on it**. The doctrine produces harsh results where a contract is made for the benefit of a **third party**, and for over a century the courts developed a patchwork of common-law and equitable exceptions to soften its rigour. Parliament finally intervened through the **Contracts (Rights of Third Parties) Act 1999**, which creates a statutory route for a third party to enforce a term made in its favour. This chapter explains the **doctrine of privity**, the surviving **common-law and equitable exceptions**, the operation of the **1999 Act**, and the rules on **joint and several liability** of multiple parties.

Assessment focus

For SQE1 you must be able to **state the doctrine of privity** and its two limbs, **identify the common-law exceptions** still in active use (agency, assignment, trusts of promises, collateral contracts, the **Albazero / Linden Gardens** line of authority, and negligence in tort), and **apply the 1999 Act** with precision — particularly **s.1(1)(a)**, **s.1(1)(b)** read with **s.1(2)**, the **s.1(3)** identification requirement, the **defences** under s.3, and the restrictions on **variation and rescission** under s.2. Expect single best answer questions asking whether a named third party **can enforce** a promise and, if so, **against whom** and **subject to what defences**. This is a closed-book assessment — be able to work methodically through the statutory checklist from memory.

Study tips

1) Learn the **two limbs of privity** (a non-party may neither sue nor be sued) and the leading cases **Tweddle v Atkinson (1861)** and **Dunlop v Selfridge [1915]**. 2) Memorise the **six common-law/equitable exceptions**: agency, assignment, trusts of promises, collateral contracts, Albazero damages, and tort. 3) Master the **s.1 two-gateway test**: s.1(1)(a) (express right) OR s.1(1)(b) (term purports to confer a benefit) — the latter rebuttable under s.1(2), with the **burden on the promisor** (**Nisshin Shipping v Cleaves**). 4) Remember **s.1(3)**: the third party must be **expressly identified** by name, class or description, but need **not yet exist** (**Avraamides v Colwill**). 5) Know the three triggers of **crystallisation under s.2(1)**: assent, known reliance, or foreseeable reliance. 6) Apply **s.3** (defences) and **s.6** (excluded categories) when asked whether enforcement succeeds.