Common Law and the Doctrine of Privity Essay Example | Topics and Well Written Essays - 1750 words

Common Law and the Doctrine of Privity - Essay Example However, with implementation of the Contracts (Rights of Third Parties) Act 1999 (hereafter â€Å"the Act†) many transformations have been witnessed, consequently enabling third parties to enforce terms in contracts. In essence, the common law is built on a number of key principles that stipulate that the third party cannot have rights or bear the liability upon a contract he is not a partisan. In order to understand the privity doctrine, it is essential to first relate it to the law of contract. A contract is defined as a promise of exchange that is legally enforceable. Additionally, a contract can only exist if there is an offer - a promise of exchange is made by an offeror to the offeree, acceptance - where the offeree delivers whatever has been promised, and consideration - the bargain for exchange or simply price for exchange. In addition, it is important to ensure that there exists enforcement and reliance (Koffman & Macdonald, 2007)1. The common law is in most cases dee med as being unfair. A good example, person A enters into a bidding contract with person B, and one of the agreement is that person B will continue paying considerations to person A’s wife upon his death. However, B refuses to honor the promise upon A’s death. Under the common law A’s wife cannot sue B because she is not a party to the agreement. In this light, is the common law fair or unfair? The privity doctrine exists in the premises of contract law which states that only a party to a contract can impose it. It further, states that an agreement cannot inflict enforceable commitments on individuals who are not parties to a contract. This is very practical and ideal in many circumstances; however, it can give rise to some unsatisfactory and discriminatory results in practice. An example of the unsatisfactory eventuality is if a contract is entered into by an agent for another first, or on behalf of the contracting persons. Therefore, numerous exceptions have b een settled to the doctrine. The precise exceptions to the privity doctrine industrialized from case law and precise legislative provisions. As such, the Privity Act 1982 relates to all contracts. As a result, then Act allows a third party beneficiary to a contract, who was projected to benefit from the contract, to enjoy enforcing rights. Nevertheless, the third party has to institute two key elements, namely, the contract must clearly indicate an intention to confer a benefit on the third party legatee, and that the third party must be clearly identified in the contract (designation). Consequently, the Act is void if the promise is not projected to bring forth an obligation that is enforceable by a non-contracting party. Therefore, the privity Act was aimed at empowering third parties to enforce a contract and be compensated for damages where appropriate. In this light, this paper is going to explore whether the common law position prior to the act was justifiable and whether thir d parties have now been given 'a ticket to ride’. Moving on the same, the Act addresses the concerns of variations of contracts advancing a benefit on a non-contracting party. Therefore, the parties to a contract that comprises an enforceable benefit to a third party legatee may revise or end the contract at any stage with the approval of that third party legatee. Consequently, the contract may also be revised or ended minus the approval of that third party beneficiary, up to when the position of the third party benef