Contract Law: Privity and Third Party Rights
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Questions and Answers

What is the primary issue with finding a remedy for B in a contract breach?

  • B is not directly affected by the breach
  • C is not a party to the contract
  • B would not have received the money in the first place (correct)
  • A has no contractual obligation to B

What is the term used to describe B's interest in the contract?

  • Performance interest (correct)
  • Reliance interest
  • Expectation interest
  • Restitution interest

What was the outcome in the case of Beswick v Beswick?

  • The contract was declared void
  • Damages were awarded to B
  • A was found not liable
  • An order for specific performance was made (correct)

What was the significance of the Radford v DeFroberville case?

<p>It held that B's claim against A for damages was not reduced by the fact that the contract also conferred a benefit upon C (A)</p> Signup and view all the answers

What is the general purpose of an award of damages in a contract breach?

<p>To put the party where they would have been but for the breach of contract (A)</p> Signup and view all the answers

What was the limitation imposed by the House of Lords in the Panatown case?

<p>The third party has a direct remedy against the promisor (B)</p> Signup and view all the answers

In what situation can the court make an order for specific performance?

<p>When the contract is for a unique subject matter, such as land (C)</p> Signup and view all the answers

In what case did the court allow the promisee to enforce a contract for the benefit of a third party?

<p>Linden Gardens Trust v Lenesta Sludge (C)</p> Signup and view all the answers

What is the consequence of the Panatown decision on the exceptions to privity of contract?

<p>The exceptions are now less widely applicable (B)</p> Signup and view all the answers

What is the purpose of an order for the specific performance of a contract?

<p>To ensure the promisor performs their obligations (D)</p> Signup and view all the answers

What is the primary purpose of the devices created in various cases to circumvent the doctrine of privity of contract?

<p>To provide a legal basis for the third party's rights at common law (C)</p> Signup and view all the answers

What is the effect of the Contracts (Rights of Third Parties) Act 1999 on the doctrine of privity of contract?

<p>It preserves the doctrine of privity of contract (B)</p> Signup and view all the answers

Who can sue to enforce the promise in the scenario where A promises B to pay C £100?

<p>B, the promisee, can sue to enforce the promise (B)</p> Signup and view all the answers

What is the main difficulty with the enforcement of promises by the promisee?

<p>Two difficulties can arise when the enforcement is to be made by the promisee (C)</p> Signup and view all the answers

What is the primary aim of the courts when dealing with clauses seeking to exclude liability?

<p>To give effect to the clause (B)</p> Signup and view all the answers

What is the concept where a third party may be made liable for a promise made in consideration of the promisee's entry into the main contract?

<p>Collateral contract (B)</p> Signup and view all the answers

What is the outcome if a trust of a promise is successfully constituted?

<p>The third party can recover the whole of the loss suffered (C)</p> Signup and view all the answers

What is the Act that deals with the rights of third parties in contracts?

<p>Contracts (Rights of Third Parties) Act 1999 (D)</p> Signup and view all the answers

What is the typical reason for refusing to find a trust in favour of a third party?

<p>Failure to prove any positive intention to create a trust (D)</p> Signup and view all the answers

What is the case that illustrates the problem of privity of contract?

<p>Raymond Burke Motors Ltd v Mersey Docks &amp; Harbour Co (D)</p> Signup and view all the answers

What is the primary concern of the doctrine of privity of contract?

<p>Who can enforce a contract (C)</p> Signup and view all the answers

Under the Contracts (Rights of Third Parties) Act 1999, when can a third party enforce a benefit conferred upon them?

<p>When the contract confers a benefit on the third party, unless the parties intend otherwise (C)</p> Signup and view all the answers

What is the additional requirement for a third party to enforce a benefit conferred upon them?

<p>The third party must be explicitly named in the contract, or be part of a particular class or description (B)</p> Signup and view all the answers

What is the significance of the Dunlop v Selfridge case?

<p>Both a and b (A)</p> Signup and view all the answers

What is the general rule of the doctrine of privity of contract?

<p>Only parties to a contract are bound by it, and cannot compel third parties to do something (A)</p> Signup and view all the answers

Why might the court view the lack of a conferment of a benefit on a third party as indication that there is no performance interest?

<p>Because the parties have chosen not to confer a benefit (B)</p> Signup and view all the answers

In what circumstance might the lack of a 'performance interest' allow a promisor to breach a contract with impunity?

<p>When the parties have accidentally brought themselves within the ambit of the Act (A)</p> Signup and view all the answers

What is the primary role of an agent in a contractual agreement?

<p>To act on behalf of the promisee (D)</p> Signup and view all the answers

What is the effect of an agency relationship on the contractual parties?

<p>It creates privity between the principal and the third party (A)</p> Signup and view all the answers

What is the significance of the Contracts (Rights of Third Parties) Act 1999?

<p>It provided parties with the opportunity to confer a benefit on a third party (D)</p> Signup and view all the answers

In what circumstances is a third party's protection from changes to a contract ensured?

<p>Where the third party has communicated their assent to the term to the promisor (A)</p> Signup and view all the answers

What can the contracting parties do to vary the extent of the Act's application?

<p>Specify that the contract can be varied or rescinded by the contracting parties (C)</p> Signup and view all the answers

When can a promisor rely on a defence or set-off in a contract?

<p>When the third party brings a claim against the promisor (A)</p> Signup and view all the answers

What is a limitation on the application of the Contracts (Rights of Third Parties) Act 1999?

<p>The contracting parties must intend for the Act to apply (B)</p> Signup and view all the answers

When does the Contracts (Rights of Third Parties) Act 1999 not apply?

<p>When the contracting parties do not intend the Act to apply (C)</p> Signup and view all the answers

What is required for a third party to enforce a term of the contract?

<p>The Contracts (Rights of Third Parties) Act 1999 to apply (A)</p> Signup and view all the answers

When can the contracting parties vary the extent of the Act's application?

<p>In their contract, by specifying the extent of the Act's application (A)</p> Signup and view all the answers

What is the significance of the Contracts (Rights of Third Parties) Act 1999?

<p>It provided a statutory exception to the doctrine of privity of contract (B)</p> Signup and view all the answers

What is the consequence of the Contracts (Rights of Third Parties) Act 1999 on the doctrine of privity of contract?

<p>It provided an exception to the doctrine (B)</p> Signup and view all the answers

When can the third party bring a claim against the promisor?

<p>When the third party has relied on the term (A)</p> Signup and view all the answers

Flashcards

Contract Breach Remedy Issue (B)

B wouldn't have received the money originally, so no remedy needed.

B's Contractual Interest

B's right to expect the contract obligations to be fulfilled.

Beswick v Beswick Outcome

Specific performance order for fulfilling the contract.

Radford v DeFroberville Significance

Contract benefit to C didn't reduce damages owed to B.

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Damages in Contract Breach

Compensate the injured party for losses, putting them in pre-breach position.

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Panatown Case Limitation

Third-party has direct remedy against promisor (not the original contract).

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Specific Performance Circumstances

Contracts for unique items like land (often real estate).

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Third-Party Contract Enforcement Case

Linden Gardens case allowed third parties to enforce promises.

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Panatown Effect on Exceptions

Reduced scope of exceptions to the privity rule.

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Specific Performance Purpose

Force promisor to fulfill contractual obligation.

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Circumventing Privity Devices Purpose

Provide legal basis for third parties under common law.

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Contracts (Rights of Third Parties) Act 1999 Impact

Privity doctrine remains largely intact.

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Contract Enforcement by Promisee (A to B to C)

Promisee (B) can enforce A's promise to pay C.

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Promisee Enforcement Difficulties

Two separate issues can arise when promisee needs to enforce.

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Liability Clause Court Aim

Respect the clauses' intent of excluding liability.

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Collateral Contract

Third-party liability based on consideration by a promise's entry into a contract.

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Trust of Promise Success

Third party recovers full damages.

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Third Party Rights Act

Contracts (Rights of Third Parties) Act of 1999.

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Refusal to Find Trust Reason

Lack of clear intention to create a trust.

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Privity of Contract Problem Case

Specific case highlighting the issues of who enforces the promise.

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Privity Contract Doctrine Concern

Determining who can enforce a contract

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Contract (Rights of Third Parties) Act 1999 - Third-Party Enforceability

Third-party can enforce contract benefit.

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Additional Benefit Enforcement Requirement

Explicit naming in the contract or being part of a group.

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Dunlop v Selfridge Significance

Establishes the privity doctrine principle that only contracting parties are bound.

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Privity of Contract General Rule

Contract can only be enforced by the parties who signed the contract.

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Lack of Benefit, Performance Interest

No benefit indication for third party, no performance interest.

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Promisor Breach with No Performance Interest

Promisor in such circumstances can breach with exemption.

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Agent's Role in Contract

Acts on behalf of a principle in a contract.

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Agency Relationship Effect on Parties

Creates agreement between principal and third party.

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Contracts (Rights of Third Parties) Act 1999 Significance

Statutory third-party rights.

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Third Party Contract Variation Protection

Third party rights in terms of contract changes are protected.

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Contracting Parties to Alter Act's Scope

Able to explicitly limit the Act's scope.

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Promisor Defense/Set-Off in Third-Party Claims

Promisor can use defenses against third-party claims.

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Contracts (Rights of Third Parties) Act 1999 Limitation

Parties must intend the Act's application.

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Act 1999 Non-Application Conditions

Doesn't apply when parties want to exclude its scope.

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Third Party Contract Term Enforcement Requirements

Act 1999 must be applicable to enable enforcement.

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Contracting Parties and Varying Act Application

Parties can shape the Act's effect within the contract.

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Act's Significance for Privity

Provided a statutory exception to privity limitations.

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Consequence of Act on Privity Doctrine

Provided an important exception to privity.

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Third-Party Claim against Promisor Condition

Third party needs to meet the conditions within the Act to claim.

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