Doctrine of Privity

The doctrine of privity of contract is a common law rule holding that a contract cannot give rights to, or place obligations on, anyone who is not a party to that contract, so a third party generally cannot enforce a contract made for the benefit of that third party. The doctrine took shape in the nineteenth century alongside the doctrine of consideration, through cases such as Price v. Easton in 1833, which held that a non-party had no contractual rights, and Tweddle v. Atkinson, which tied privity closely to the requirement of consideration; Dunlop Pneumatic Tyre v. Selfridge and Co. Ltd later reinforced the principle through the judgment of Lord Haldane. Privity also shaped the early law of negligence, since cases such as Winterbottom v. Wright in 1842 stopped an injured consumer from suing a manufacturer with whom the consumer had no direct contract, until the 1916 decision of Judge Cardozo in MacPherson v. Buick Motor Co. reframed the liability of a manufacturer as a matter of tort rather than contract, sidestepping the privity bar. The harsh effects of the doctrine later led to statutory reform, most notably the Contracts (Rights of Third Parties) Act 1999 in England and Wales, which lets a third party enforce a contract term if the contract expressly names that party or clearly intends to benefit them, and similar reforms followed in Australia, New Zealand, and Hong Kong.