Privity of Contract Case Study Example | Topics and Well Written Essays - 6000 words

Privity of Contract - Case Study ExampleThis prospect of the rule became a hindrance, where the contract was made to the benefit of the third party. Collateral warranties support the viability of this rule.Prior to 1833 in that respect existed decisions in English Law, which permitted utilizement of the victual of a contract by persons non party to the contract. The doctrine of privity emerged unneurotic with the doctrine of friendship, which states that consideration must move from the promisee. That is if nothing is given for the promise of something to be given in return, that promise is not legally binding unless promised as a deed.In the case of Price v Easton, where a contract was made for work to be done in exchange for payment to a third party. When the third party attempted to sue for the payment, he was held to be not privy to the contract, and as such his claim failed1.This was completely linked to the doctrine of consideration and was established by the case of Twed dle v Atkinson, where the plaintiff was unable to sue the executor of his father-in-law, who had promised to the plaintiffs father to make payment to the plaintiff, because he had not provided any consideration to the contract. The husbands claim against his father - in - laws estate was dismissed on the grounds that no consideration had locomote from the husband2.The doctrine was further developed... Sometimes, the doctrine does not apply, either because of supervening principles of law or because of specific statutory provisions which allow a third party to enforce a right conferred on him by the spotting parties. In Beswick v Beswick, a nephew bought his uncles coal business. A term in this transaction was that the nephew would support his uncles married woman on the uncles death. However, the nephew did not honour this and the widowed aunt was permitted to sue as executor of her husbands estate and obtain compensation4. In Vandepitte v Preferred Accident Insurance co, it was h eld that a party to a contract can befit a trustee for a third party of a right under the contract and then confer such rights to a third party. After this the trustee can initiate steps to enforce performance as in the case of other equitable rights5. In McCannell v Mabee McLaren Motors Ltd, the extent of enforceability of a contract between Studebaker, a car producer, and a dealer by another dealer was unyielding by the court which held that the agent of the several dealers to bring about privity of contract between them. The consideration is not moving from the company to the dealer, but from one dealer to another and that the test of agency was created by the efforts of the manufacturer in bringing the parties together6. Further, in New Zealand shipping Co. Ltd v A.M. Satterthwaite & Co. Ltd, Ajax was a manufacturer and vendor of drills send the same by ship to New Zealand from England. The drill was damaged in transit by the NZ Shipping Co. The bill of lading contained cla uses, which stipulated that the shipper and sub contractors could not