DOCTRINE OF PRIVITY

The doctrine of privity of contract, which possess that only the parties to a contract have
incurred contractual obligation, particularly implicated by this question. The Contracts
(Rights of Third Parties) Act of 1999 (the "Act") altered the legislation so that third
parties could no longer be prosecuted for breaching of contracts in which they were not
entities.

The privity doctrine has heavily criticized from both Lord Diplock and Lord Steyn, both of
them termed it as "an archaic flaw that has for long years been considered as a
discredit to the law and it have no place in our more sophisticated modern world." In
case Tweedle v. Atkinson, wherein the judges ruled that third parties to a contract
have no legitimate right to the contract and therefore are not permitted to claim any
rights from it or be bound to any obligations imposed by it. Thus, the doctrine of privity
of contract was established. The common law principle of privity has served as a core
principle of English contract law for almost 200 years. This has not traditionally become
a well-known rule that agreements cannot be implement in case of a third party. The
benefit rule that also asserts that a contract can't be conducted by a third party and
create controversy for various reasons.

The principle states that a third party cannot be pled relying on a contract to which
he/she is not a party was implemented in the nineteenth century, despite the fact that it
was criticized by many. The privity theory's unfairness was enhanced by the laws
governing compensation Jackson v. Horizon Holidays Ltd. The House of Lords
strongly opposed this approach in the case of Woodar Investment Development Ltd
v. Wimpey Construction UK Ltd.

There are variety of reasons, the privity doctrine restricts the right of the third-party.
First, since a third party wasn't engaged in the formal creation of the contract they had
absence of contractual rights,because duties and obligations belongs to the entities
who created agreements. "Consent requirements in contracts protect individual
autonomy, whereas letting third parties benefit from contract clauses does
not" (Consultation Paper No. 121, 1991) according to the law commission. Secondly, a
third party is deemed to have been no contractual obligations when no consideration is
given. Thirdly, The Law Committee stated that the promisee was liable for payment not
the third party. It is unethical to consider someone to be a contract party if they cannot
be sued. Present privity statutes preserve the promisor's rights because he has a claim
against the promisee but not the third party. Fourth, the promisee and third party have
two approaches for holding the promiser accountable. A promise can only resulted in
one kind of action,, and once it is acted out, the promisor is no longer liable. Regarding
privity, third persons cannot be offered contractual rights, however this limitation can be
overruled. Disputes can arise even with lawyers in Beswick v Beswick. Finally, The
power of third parties to take legal action depending on agreements made in their favor
may restrict the ability of contracting parties to terminate or change agreements and
subject the promisor to a multiple third party. According to the Law Commission, every
amendment must maintain the integrity of the parties and specify “third parties” to get rid
of the wave of litigation.

This brings serious doubt on how much validity exists for the principle of privity. The
Law Commission declared that clear statute is essential to guarantee third-party rights.
Regardless, the Act did not represent the best option. '

Third parties may implement contractual conditions on their own behalf if the contract
pointedly authorizes it (section 1(1)(a)) or the term "purports to confer monetary value
on a third party" (section 1(1)(b)). This important issue is covered within S. 1. It is a
reasonable belief that a third-party has the right to enforce the benefit-creating
legislation as a consequence of a parliamentary act (see section 1(2)).In
case Laemthong International Lines Co. Ltd v. Artis (2005) and Nisshin Shipping
Co. Ltd v. Cleaves & Co. Ltd (2003) the meaning of the word "purpose" is made clear
and therefore the courts are willing to apply a presumption or primary reasoning
approach to identify the main purpose.

While this interpretation of section 1(1) seem to have unintentional outcomes, section
1(3) specifies that every third party be clearly acknowledged in the contract by title, as a
member of a particular class of persons, or as satisfying specified characteristics
(section 1(3)). A judge in Jackson v Horizon Holidays would likely decide that the
contract was formed for the benefit of the claimant's entire family given the fact that
every one of the family were specified in the contract, they all made the "family trip"
jointly, and the cost unambiguously covered the entire family. Contracts that link to
groupings or classes of persons instead of specific third parties by name may lead to
some problems. A term that describes a large number of unidentified people doesn't
always fulfill the requirements for a "expressly identifiable individual" for the
requirements of section 1(3), since it does not incorporate the word "expressly" instead
of "implication or construction".

The challenging topic of modification and repealing is discussed in Section 2. In

summary, it confirms that the contracting parties cannot agree to the termination or
modification of the contract without the approval of the third party whose entitlements
will be infringed. A third party must have expressed consent, identified that a third party
anticipated relying on the legislation, or actively relied on it in order to the limitations to
be effective. The Act seems to support the possibility of changing the matter to the
express cooperation of a third party in this sort of way. While implementing any
changes, parties to the contract should clarify with the third party to verify whether it is
reasonable to believe that it relies on the controversial term, as this is commonly the
case.

Finally , consideration is not included in the Act. Tweddle v. Atkinson seems to have
been invalidated, leaving a huge discrepancy in the Act's legislative structure. In
Tweddle's judgment, the Law Commission differentiated among promises made for no
reason and those justified by consideration (but executed by a third party). In other
words, this interpretation of the statute will put more priority on the right to assume a
commitment that is supported by consideration, regardless of whether the third party
doesn't profit.

In conclusion, The Act states that common law "artificial and often problematic
exclusions" can be set aside to prevent the injustice of the privity rule. The Act provided
contractual entities intention and lawful expectations effect, though it also raises
difficulties and challenges. Although there are statutory provisions, this is nevertheless
true.