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Privity is the legal term for a close, mutual, or successive relationship to the same right of property or the power to enforce a promise or warranty. It is an important concept in
contract law A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to t ...
.


Contract law

{{main article, Privity of contract The principle of
privity Privity is the legal term for a close, mutual, or successive relationship to the same right of property or the power to enforce a promise or warranty. It is an important concept in contract law. Contract law {{main article, Privity of contract The ...
in the
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omniprese ...
's
law of contract A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tran ...
dictates that persons may not reap the benefits nor suffer the burdens of a contract to which they were not a party. Under the doctrine, if a consumer bought goods from a retailer who had originally bought them from the manufacturer, then, if the goods proved faulty, the consumer should sue the retailer. The consumer could not sue the manufacturer in contract law because no contract existed between them. The retailer could then counterclaim against the manufacturer. In most cases, however, consumers may rely on the manufacturer's guarantee that will have been assigned to them. In England, the leading privity case was ''
Tweddle v Atkinson is an English contract law case concerning the principle of privity of contract and consideration. Its panel of appeal judges reinforced that the doctrine of privity meant that only those who are party to an agreement (outside of one of the wel ...
'' 861EWHC J57 (QB), but this case immediately revealed the limits of the doctrine and two
Law Commission A law commission, law reform commission, or law revision commission is an independent body set up by a government to conduct law reform; that is, to consider the state of laws in a jurisdiction and make recommendations or proposals for legal chang ...
reports proposed reform. Finally, English law was amended by the Contracts (Rights of Third Parties) Act 1999, which allows non-party beneficiaries of a contract to enforce the contract, substantially modifying the doctrine. However, the doctrine has not been completely abolished. In particular the question arises as to whether a third party (such as an
employee Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any ot ...
,
agent Agent may refer to: Espionage, investigation, and law *, spies or intelligence officers * Law of agency, laws involving a person authorized to act on behalf of another ** Agent of record, a person with a contractual agreement with an insuranc ...
,
stevedore A stevedore (), also called a longshoreman, a docker or a dockworker, is a waterfront manual laborer who is involved in loading and unloading ships, trucks, trains or airplanes. After the shipping container revolution of the 1960s, the number ...
, or
freight forwarder A freight forwarder, or forwarding agent, is a person or company who, for a fee organizes shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer or final point of distribution.
) may rely upon an exemption clause limiting liability in a contact between two others. The matter was addressed in '' Scruttons v Midland Silicones''
961 Year 961 (Roman numerals, CMLXI) was a common year starting on Tuesday (link will display the full calendar) of the Julian calendar. Events By place Byzantine Empire * March 6 – Siege of Chandax: Byzantine forces under Nikephoro ...
UKHL 4, where Lord Reid gave guidelines which were subsequently followed in ''New Zealand Shipping v Sattersthwaite'' 974UKPC 1. The cases of ''Norwich CC v Harvey''
989 Year 989 ( CMLXXXIX) was a common year starting on Tuesday (link will display the full calendar) of the Julian calendar. Events By place Byzantine Empire * Emperor Basil II uses his contingent of 6,000 Varangians to help him defeat ...
1 WLR 828 and ''
Adler v Dickson A Himalaya clause is a contractual provision expressed to be for the benefit of a third party who is not a party to the contract. Although theoretically applicable to any form of contract, most of the jurisprudence relating to Himalaya clauses re ...
'' 9551 QB 158 also shed light on this area of law.


US federal law

In the
US federal law The law of the United States comprises many levels of codified and uncodified forms of law, of which the most important is the nation's Constitution, which prescribes the foundation of the federal government of the United States, as well as va ...
of ''
res judicata ''Res judicata'' (RJ) or ''res iudicata'', also known as claim preclusion, is the Latin term for "a matter decided" and refers to either of two concepts in both civil law and common law legal systems: a case in which there has been a final jud ...
'', privity is said to preclude a party to a legal action from raising an issue that either was raised or could have been raised in previous legal action. Under federal law, "concepts summarized by the term privity are looked to as a means of determining whether the interests of the party against whom
claim preclusion ''Res judicata'' (RJ) or ''res iudicata'', also known as claim preclusion, is the Latin term for "a matter decided" and refers to either of two concepts in both civil law and common law legal systems: a case in which there has been a final judgm ...
is asserted were represented in prior litigation." Therefore, privity in federal common law is "a convenient means of expressing conclusions that are supported by independent analysis." Because privity is actually a term to summarize a conclusion that one party was precluded, it "may exist for the purpose of determining one legal question but not another depending on the circumstances and legal doctrines at issue."''Chase Manhattan Bank'', 56 F.3d at 346.


See also

* Privity in English law *
Privity of estate Privity of estate is a mutual or successive legal relationship to the same right in real property, such as the relationship between a landlord and tenant. Thus, privity of estate refers to the legal relationship that two parties bear when their esta ...
*
Third party beneficiary A third-party beneficiary, in the law of contracts, is a person who may have the right to sue on a contract, despite not having originally been an active party to the contract. This right, known as a ''ius quaesitum tertio'', arises when the thir ...


References

Legal doctrines and principles United States federal law