What are some of the main arguments for and against maintaining the doctrine of privity within the law of contract?

The doctrine of privity within the law of contract provides that only the parties to a contract can either enforce it or incur an obligation under it. So, if A makes a contract with B to incur a benefit upon C, under the doctrine of privity C cannot enforce it. There are a number of exceptions which grant C a remedy in the case of non-compliance by the contracting parties, including the expansion of the tort of negligence and the introduction of the Contracts (Rights of Third Parties) Act 1999. Therefore, the general rule that a third party cannot enforce a contract has been greatly eroded and is also increasingly unpopular. There are, however, arguments that the privity doctrine should be maintained. It can be argued, for example, that contractual obligations are fundamentally voluntary ones. Upon entering a contract, each party of their own free will decides to commit to a certain promise or task. These commitments are, however, not undertaken to just anyone. They are instead promises to a particular person or class of persons. Such a promise is communicated by the promisor (A) to the promisee (B). As such, the obligation is created purely between the one committing the promise (the promisor) and the one receiving it (the promisee). Consequently, it would seem logical on first examination that only the one to whom the promise was made should be able to enforce it. The promisor did not make the promise to a third party (C), and although the promisor (A) has entered a voluntary obligation to fulfil said promise, his obligation is to the promisee (B), not a third party (C). There seems an obvious distinction between the party who merely was aware of a promise and the party to whom the promise was made. The third party has no obligation owed to him, even if he were to rely on the promise made to the promisee.In contrast there are multiple propositions that would suggest the doctrine of privity should be abolished. As mentioned, there already exist a number of exceptions to the rule. It therefore might be advantageous to abolish it altogether rather than continue with a complicated patchwork of exceptions, which generates uncertainty. Additionally, a major line of thought behind the law of contract is to give effect to the intentions of the contracting parties. Where A and B contract to benefit C, enforcing the privity doctrine would frustrate this intent. Furthermore, enforcing privity causes injustice to a third party, C, who has a reasonable expectation of having the legal right to enforce the contract between A and B. The privity doctrine also can cause the strange result where the person (the third party, C) who has suffered loss (of the intended benefit) cannot sue, while a person (the promisee) who has suffered no financial loss can sue. In this case, even if the promisee (B) can sue, he may not choose to, leaving the third party (C) without a remedy.

Answered by Daniel L. Law tutor

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