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 with... Continues...