Principle of Privity of Contract Essay,Extract of sample "Privity of Contract"
WebNov 9, · The common law doctrine of privity of contract dictates that only persons who are parties to a contract are entitled to take action to enforce it. It means that WebAnswer: 1. Although a contract or its performance can affect a third party, the doctrine of privity means that, as a general rule, a contract cannot confer rights or impose WebThis is referred to as Privity of contract. The Doctrine of Privity of Contract under English Law The doctrine of “Privity of Contract” which means that a contract is a contract ... read more
III sem. A contract is an agreement between two or more parties that creates an obligation to do or not to do something. The parties to the contract are under an obligation to perform the terms and conditions as laid down in the contract. Don't use plagiarized sources. Thus a contract can confer rights or impose obligations arising under the contract on the parties to the contract. Third parties cannot be under such an obligation to perform or demand performance under a contract. This is referred to as Privity of contract. Thus a stranger to the consideration cannot sustain the action on the promise made between two persons unless he has in some way intervened in the agreement. G failed to do so and the plaintiff sued his executors. Thus, although the sole object of the contract was to secure a benefit to the plaintiff, he was not allowed to sue as the contract was made with his father and not with him The two basic principles under the English Law as can be ascertained from the above cases are that firstly consideration should move from the promisee only and secondly that a contract cannot be enforced by a person who is not a party to the contract even if it is made for his benefit.
The Doctrine in India. There has been a divergence of opinion in India as to whether the Doctrine of Privity of Contract, which prevails in the English Courts, is applicable to the Indian Courts. The provisions of the Act prevail over any usage or custom or trade however the same will be valid as long as it is not inconsistent with provisions of the Act. A promise is enforceable if there is some consideration for it and it is quite immaterial whether it moves from the promisee or any other person.
However there is no specific provision in the Act which either for or against the Doctrine of Privity of Contact. It is through a series of case laws that the Doctrine has evolved. There are two aspects of this doctrine. Firstly, no one but the parties to the contract are entitled under it. Rights or benefits may be conferred upon a third party but such a third party can neither sue under the contract nor rely on defenses based on the contract. The second aspect is that the parties to a contract cannot impose liabilities on a third party.
Conclusion The Act does not specifically provide for the doctrine of Privity of Contract, however through a series of case laws the doctrine is now applicable in India along with various exceptions. With reference to consideration of a contract the position in India and England are however different. Under the English law only a party to the contract can pay the consideration. Under the Indian Law, it is not necessary that consideration should be paid by the promisee. Though there are no express provisions as to assignment of rights and obligations under a contract in the Act, the Principle of assignment has been recognized and developed by the courts through its various decisions. A person may not give any consideration, but is a party to the contract may enforce the contract A stranger to a contract cannot sue : Suppose A and B enter into a contract for the benefit of C.
The agreement between and A and B cannot be enforced by C. Originally, the concept was created in order to prevent third parties from enforcing the agreement. In the middle of the 19 th century, the British court ruled out the privity of contract to stop that behavior Law Commission 2. It was justified by another legal concept known as consideration. Consideration is something that one of the sides puts into the contract. It can be physical or virtual. Thus, both sides have investments in the contract and will lose out if it is not fulfilled. The concept of privity was developed based on the logical assumption that an agreement should only concern parties which have invested in it. It has existed almost unchanged for about half a century until the problems with the concept became apparent to judges around the world.
The first noticeable exception to the concept was created in In the case called MacPherson v. Buick Motor Co. MacPherson sued Buicks Motors over a car wheel which broke and caused him to get injured. Originally, Buick denied responsibility since the car was bought from a retailer and there was no privity between the consumer and the manufacturer. However, the court ruled that the manufacturer has a duty of care for the consumers and is held responsible in case a user gets harmed due to using the product. So, nowadays, despite there being no formal contract between the producer and the consumer, a manufacturer can still be sued for the faulty products.
That practice is a part of the consumer protection laws which help to ensure that the producer can be held responsible for low-quality goods that cause harm to the users. Another common exception to the privity of contract is the case of trusts. If one of the sides of the agreement is trusted by a third party with commodities that are a part of the contract, the third party can sue the holder of those goods to enforce the contract Tufal 2. Formally, this is not considered an exception since the third party would not be suing the other side of the agreement. Instead, they would be suing the side trusted with the commodities.
So in the case provided above, C can sue B to force them to initiate the legal action against A. They still cannot sue A since they are bound by no agreement to that party. Insurance agreements are one more exception. In this case, if the insurance company is supposed to pay a third party based on the agreement with the insured person, the third party has the right to seek to enforce the agreements. We can encounter this exception most commonly in cases of the automobile insurance. If the insured car gets into the accident, the insurance company is obligated to pay the damages to the other side of the incident. The agreement is between the company and the owner of the insured car, but the third party can sue for the contract to be fulfilled.
The exception is obviously meant to ensure that the company cannot just refuse the payment on the behalf of the insured person. Another interesting exception is the restrictive covenant. For example, if upon buying a plot of land the owner made an agreement with his neighbors to never build anything on it, that covenant applies to anybody who will buy that land in the future. So the contract between the original seller and the original buyer also applies to third parties. This exclusion ensures that the change of owner does not violate the original terms of the purchase contract. While these various exceptions make sure that the person most interested in the execution of the contract can execute it, they make the whole concept extremely complicated.
While it seems logical that only the sides of the agreement should be able to make each other liable as we can see from the examples above, the reality is much more complicated. For that reason, many lawyers have suggested changes to the concept. The British law was corrected to ensure that the contracts include all the exceptions in Contracts Rights of Third Parties Act par. In other countries, this area remains rather unclear. It is extremely important to understand the concept of privity of contract. We may not realize this, but we come in contact with this principle and exceptions to it daily. Buying something from a store we are exempted from the rule of privity. The producer does not answer only to the retailer.
Submitted by:- Ankit Bhardwaj M. III sem. A contract is an agreement between two or more parties that creates an obligation to do or not to do something. The parties to the contract are under an obligation to perform the terms and conditions as laid down in the contract. Don't use plagiarized sources. Thus a contract can confer rights or impose obligations arising under the contract on the parties to the contract. Third parties cannot be under such an obligation to perform or demand performance under a contract. This is referred to as Privity of contract. Thus a stranger to the consideration cannot sustain the action on the promise made between two persons unless he has in some way intervened in the agreement.
G failed to do so and the plaintiff sued his executors. Thus, although the sole object of the contract was to secure a benefit to the plaintiff, he was not allowed to sue as the contract was made with his father and not with him The two basic principles under the English Law as can be ascertained from the above cases are that firstly consideration should move from the promisee only and secondly that a contract cannot be enforced by a person who is not a party to the contract even if it is made for his benefit. The Doctrine in India. There has been a divergence of opinion in India as to whether the Doctrine of Privity of Contract, which prevails in the English Courts, is applicable to the Indian Courts.
The provisions of the Act prevail over any usage or custom or trade however the same will be valid as long as it is not inconsistent with provisions of the Act. A promise is enforceable if there is some consideration for it and it is quite immaterial whether it moves from the promisee or any other person. However there is no specific provision in the Act which either for or against the Doctrine of Privity of Contact. It is through a series of case laws that the Doctrine has evolved. There are two aspects of this doctrine. Firstly, no one but the parties to the contract are entitled under it. Rights or benefits may be conferred upon a third party but such a third party can neither sue under the contract nor rely on defenses based on the contract.
The second aspect is that the parties to a contract cannot impose liabilities on a third party. Conclusion The Act does not specifically provide for the doctrine of Privity of Contract, however through a series of case laws the doctrine is now applicable in India along with various exceptions. With reference to consideration of a contract the position in India and England are however different. Under the English law only a party to the contract can pay the consideration. Under the Indian Law, it is not necessary that consideration should be paid by the promisee. Though there are no express provisions as to assignment of rights and obligations under a contract in the Act, the Principle of assignment has been recognized and developed by the courts through its various decisions.
A person may not give any consideration, but is a party to the contract may enforce the contract A stranger to a contract cannot sue : Suppose A and B enter into a contract for the benefit of C. The agreement between and A and B cannot be enforced by C. Two father entered into an agreement to pay a new couple money on their marriage. The couple cannot sue for enforcement of the contract between the fathers. Privity of Contract. com, Sep 16, Accessed February 7, com , Sep Get in touch with our top writers for a non-plagiarized essays written to satisfy your needs. I can help you save hours on your homework. Let's start by finding a writer. Privity of Contract Check out more papers on Common Law Contract Contract Law.
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WebAnswer: 1. Although a contract or its performance can affect a third party, the doctrine of privity means that, as a general rule, a contract cannot confer rights or impose WebThis is referred to as Privity of contract. The Doctrine of Privity of Contract under English Law The doctrine of “Privity of Contract” which means that a contract is a contract WebNov 9, · The common law doctrine of privity of contract dictates that only persons who are parties to a contract are entitled to take action to enforce it. It means that ... read more
The concept of privity was developed based on the logical assumption that an agreement should only concern parties which have invested in it. Though there are no express provisions as to assignment of rights and obligations under a contract in the Act, the Principle of assignment has been recognized and developed by the courts through its various decisions. The Doctrine in India. So, nowadays, despite there being no formal contract between the producer and the consumer, a manufacturer can still be sued for the faulty products. Did you like this example?
A and B are the sides of the contract. Another interesting exception is the restrictive covenant, privity of contract essay. Such situations occur very often in privity of contract essay trade and insurance contracts. It is through a series of case laws that the Doctrine has evolved. While these various exceptions make sure that the person most interested in the execution of the contract can execute it, they make the whole concept extremely complicated. Law Commission.
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