Privity of Contract
Tweddle v Atkinson [1861]
It is now established that no stranger to the consideration can take advantage of a contract, although made for his benefit. In Dunlop Pneumatic Tyre Co. Ltd v Selfridge D Co Ltd [1915], Lord Haldane restated privity rule in Tweddle v Atkinson [1861] as follows: In the law of England certain principles are fundamental. One is that only a person who is a party to a contract can sue on it.
In law, it is a fundamental principle that two parties to a contract cannot impose liabilities to third parties nor can the third party enjoy rights in such a contract.
Third party should not sue or be sued in contract in which they are third parties. The privity principle states that only parties to a contract can enjoy rights, and be liable for meeting their obligations, under the contract. Therefore, only parties to the contract can sue or be sued. Sometimes, the contract between two parties is made for the benefit of the third party, for example a child or wife.
A contract which is made for them where they cannot even sue for breach (as in the case of Tweddle v Atkinson [1861]), can be viewed to be unfair to the beneficiaries.
2 cases
Exceptions to the privity rule
