Consultation Paper Privity of Contract


Unjust that the third party can sue on the contract but cannot be sued



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Unjust that the third party can sue on the contract but cannot be sued

2.8 One argument in favour of the privity doctrine is that it avoids the unjust result that a person could be treated as a party to a contract for the purpose of suing upon it when he could not be sued.10


2.9 However, the fact that the third party can sue, but not be sued, should not be seen as an impediment to enforceability of a contract since unilateral contracts11 in which only one person is obliged to perform are enforceable under the law of contract.12 Moreover, although the third party is immune from reciprocal action by the promisor, the promisor may protect his interests by taking action against the promisee.13 The majority of the Sub-committee must also emphasise that it is up to the parties to decide whether to confer a benefit on a third party, and what benefit is to be conferred. If their intention is to benefit a third party when they are fully aware that the third party cannot be sued, they should have the freedom to do so.





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