The Doctrine Of Privity Of Contract Contract

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The Doctrine Of Privity Of Contract. Contract Law. Private Or Public Essay, Research Paper Contract law- The Doctrine of privity. The law of contract is not about only private justice or public regulation; it is clearly concerned with a combination of both of these aspects of contract law in a number of ways. I will discuss this point in relation to the debate concerning privity of contract and whether a third party beneficiary of a contract should have a cause of action against the promisor. The general rule or doctrine, of privity in contract is that onlyparties to a contract, hence persons privy to it, have rights or liabilities under it. A non-party is a stranger to contract or (reflecting the two-party contract) a third party. It is from this general rule, that the

debate surrounding privity of contract, and causes of action for a third party erupts. The debate is a basically two-sided as outlined in Trident1 in the judgements of Mason CJ, Wilson J, and Brennan J. Mason and Wilson represent the radical 2 side of the debate, those who wish to make an exception to the doctrine and not be worried, by allowing parties not privy to the contract to sue upon it. The latter conservative side of the debate is encompassed by the argument of Brennan J in the same case. The conservative argument sanctifies the notion of contract as a bargain and wishes to preserve the doctrine of privity, by excluding third parties from the exclusive relationship denying them a cause of action against the promisor. The basic for and against debate concerning privity of

contract seems a relatively clear-cut dichotomy. The question of whether contract is about private justice (justice to the parties) or public regulation however, is not an either/or answer. The answer is a blurred combination of the two elements. When discussing the law of contract as private justice, it is crucial to define who the parties are. In its most elemental and conservative sense, contract law is concerned with private justice within a two-party model. Within this model the relationship between the two parties is an exclusive one. It is characterised by the consideration flowing from the promisee. The consideration given is the payment for the price of the promise. As a third party has not provided consideration, and paid no price for the promise, it would possibly be

unjust if he or she were able to intervene, (suing on the contract) conceivably invading the autonomy of the in personum relationship of the parties involved. In appointing a right in a two-party contract only to the parties involved, the law of contract is about private justice as it protects the autonomy of the parties, leaving them less exposed to potential liability from non-parties who have not provided consideration. The law of contract is also about private justice when treating third parties as parties to a contract, and moreover, private injustice. In Trident, private injustice is a crucial element of the radical argument in the debate concerning privity of contract. The radicals emphasise that a cause of action should be allowed in contract for McNeice, as Trident made

a contract to insure “Blue Circle Southern Cement Limited, all its subsidiary, associated and related Companies, all Contractors and Sub-Contractors and/or Suppliers. 3 Mason CJ and Wilson J agreed that this policy was “intended to cover any contractor, sub-contractor or supplier”4 (hence McNeice). And while they ponder the “problems arising 5 from allowing a third party a cause of action on promise, they consider the “injustice which flows from a…failure to give effect to expressed intention 6 and the private injustice of contract law that would flow from this failure. The combination of private justice, and public regulation is given rise to by the very nature of contract law. In a large societies social sanctions are largely ineffective and so contract law adopts