Consultation Paper Privity of Contract

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3. The Sub-committee commenced the study of its reference on 29 January 2003 and between then and the publication of this consultation paper held a total of thirteen meetings.

What is "privity of contract"?

4. The doctrine of privity of contract ("the doctrine of privity") holds that a contract cannot confer rights or impose obligations on any persons other than the parties to the contract. The doctrine of privity is also known as the "third party rule". The doctrine has two aspects: as a general rule,

(a) a person cannot acquire and enforce rights under a contract to which he is not a party; and
(b) a person who is not party to a contract cannot be made liable under it.
The second aspect is generally regarded as just and sensible. However, the first aspect that a third party cannot acquire rights under a contract to which he is not privy has been criticised. The main concern of this paper is therefore with this first aspect of the rule, and references to the doctrine of privity or the "third party rule" are to this.

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