privity of contract

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privity of contract

the relationship between the parties privy to the contract, i.e. those who are direct parties to it. Until the passing of the Contracts (Rights of Third Parties) Act 1999, English law did not permit parties not in a relationship of privity to sue on a contract. Thus, a third party benefited by a contract could not sue on it. The effect of the Act has been to substantially relax this rule, although many contracts seeks to exclude the effect of the Act. Scots law and other civilian systems recognize a JUS QUAESITUM TERTIO.

PRIVITY OF CONTRACT. The relation which subsists between two contracting parties. Hamm. on Part. 182.
     2. From the nature of the covenant entered into by him, a lessee has both privity of contract and of estate; and though by an assignment of his lease he may destroy his privity of estate, still the privity of contract remains, and he is liable on his covenant notwithstanding the assignment. Dougl. 458, 764; Vin. Ab. h.t. 6 How. U. S. R. 60. Vide Privies.

References in periodicals archive ?
Whether one believes that the lien law derogates the common law doctrine of privity (42) or that the legislature simply created non-privity lien rights out of thin air, (43) the practical consequences are the same--strict construction of Ch.
Taccad said that under the doctrine of privity of contracts, the government could only transact with 'prime contractors' like Hyundai, and not the CMS supplier.
Thus, the principled exception to the doctrine of privity was born.
While it is commonplace to refer to this protection as an exception to the doctrine of privity of contract, (19) it is submitted that this is an incorrect characterization.
With the settling of the doctrine of privity in 1861, some regard the survival of mutual wills as anomalous.
With the settling of the doctrine of privity of contract in 1861 (2) and its exclusion of third parties who were not 'privy' to the contract, the survival of mutual wills was arguably an anomaly.
Unlike other professionals, such as attorneys and accountants, design professionals for many years enjoyed relative immunity from suit based on the doctrine of privity of contract.
While the concept of privity is being replaced with a common law duty of due care in many jurisdictions, some states still cling to the doctrine of privity in analyzing claims against design professionals.
The courts made their decisions in the context of the legal doctrine of privity, which courts have contended with since the beginning of the century.
Essentially, there are four lines of authority that have eroded the strict doctrine of privity. The first of these is the doctrine of "near privity." Except in cases of fraud, an accountant is liable to a party with whom he is in privity or near privity.
Whatever the outer limits of these cases are, the above discussion indicates that there is no good reason for us to adopt a strictly literalist adherence to the doctrine of privity. Nor is it necessary for us to push beyond the outer limits of the doctrine as developed thus far and hold that there is no requirement of privity when an ultimate purchaser has economic damages only from a defective product.

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