Chapter 25 Self-test questions

. The doctrine of privity of contract concerns the two interests that a third party may have in a contract, namely, the acquisition of rights under the contract and the imposition of liabilities under the contract. Under the traditional doctrine, it was neither possible for the third party to acquire rights, nor was it possible for the third party to be subject to liabilities. Which of these aspects of the doctrine remains unchanged after the implementation of the Contracts (Rights of Third Parties) Act 1999?

A contract may only create rights as between the parties to the contract

A contract may only impose obligations as between the parties to the contract

Both aspects of the doctrine were reformed by the Contracts (Rights of Third Parties) Act 1999

. Imagine a case in which A has contracted with B to complete some repairs on a house, and B sub-contracts some of the work to C. A knows that C is to be involved in the repairs. Prior to the enactment of the Contracts (Rights of Third Parties) Act 1999, how can A take steps to ensure that it has an effective remedy in the event that C's work does not conform with the requirements of the contract?

A may ensure B contractually assumes responsibility for the standard of C's work

A may rely on a claim in tort against C in the case of any negligence on C's part

A may demand that B only sub-contract to an agreed firm C

A may demand that C sign a collateral warranty promising to exercise reasonable care and skill

. Which of the following rules of consideration does the doctrine of privity seem to be closely related to?

Consideration must be sufficient

Consideration need not be adequate

Consideration must move from the promisee

Consideration must not be past

. The judgment of Lush LJ in Lloyd's v. Harper (1880) 16 Ch D 290 is cited by certain judges in Beswick v. Beswick [1968] AC 58 and in Jackson v. Horizon Holidays Ltd [1975] 1 WLR 1468. To what avail?

In order to show that specific performance was the natural remedy to award the promisee in cases involving a third party

In order to show that substantial damages were recoverable by the promisee on behalf of the third party

In order to show that damages recoverable by the promisee would generally be limited to a nominal sum

In order to show that a third party could not sue on a contract in his/her personal capacity

. Prior to the Contracts (Rights of Third Parties) Act 1999, in which of the following cases was it most likely that substantial damages would have been available to the promisee suing on a breach of contract?

X, indebted to Y, contracts with Z in return for a promise that Z will discharge X's liability to Y

X contracts with Z to have a new central heating system installed in his old mother Y's home

X contracts with Z to provide transport for a group of visiting diplomats Y to visit the new Global Governance Institute

X contracts with Z to provide gardening services for both him and his neighbour Y

. Which of the many exceptions to the common law doctrine of privity early on looked set to be a suitable vehicle to outflank the doctrine of privity altogether?

Collateral contracts

Trusts of contractual rights

Assignment of rights under a contract

Agency

. Lord Goff suggests in The Makhutai that there may well come a time when the courts develop "a fully-fledged exception to the doctrine of privity of contract, thus escaping from all the technicalities with which courts are now faced in English law". He goes on to refer to the Canadian case of London Drugs Ltd v. Kuehne & Nagel International Ltd (1992) 97 DLR (4th) 261. If this case were imported into English law, what principle would become officially accepted with regard to third parties taking the benefit of exclusion or limitation clauses in a contract?

Himalaya clause

Vicarious immunity

Bailment on terms

Agency

. The main effect of the Contracts (Rights of Third Parties) Act 1999 is that a third party will be able to enforce a contractual provision purporting to confer a benefit on him provided certain conditions are satisfied. The conferment of such a right of action on the third party is an important statutory exception to which common law rule?

That the agreement must be sufficiently certain to allow implementation

That there must be an intention to create legal relations

That consideration must move from the promisee

None of the options given are correct

. Unless they have provided otherwise, under the Contracts (Rights of Third Parties) Act 1999, the contracting parties will lose the right to vary or cancel a third party right arising under the 1999 Act in which of the following cases? Select all that apply.

The third party has relied on the term but the promisor was not aware of such reliance nor could the promise have been reasonably expected to foresee such reliance

The third party has relied on the term and the promisor would be reasonably expected to have foreseen this.

The third party has communicated his assent

The third party has relied on the term, and the promisor is aware of this

. The Contracts (Rights of Third Parties) Act 1999 abolishes the common law doctrine of privity. True or false?

True

False

Difficult to tell at this stage

. Anthea and Barry enter into a contract under which Anthea promises to pay £10,000 to Cyril. The requirements of the Contracts (Rights of Third Parties) Act are satisfied so that Cyril acquires the right to enforce the term of the contract. It is hoped that these funds will help launch Cyril's freelance career as a violinist. He has plans to fund a large concert tour with the money. In reliance on the promise, he also goes out and buys a new bow at a cost of £2,900. Barry takes extended leave to go travelling in India and Anthea reneges on her promise. What remedies are available to Cyril under the Contracts (Rights of Third Parties) Act 1999?

Cyril has available to him all the same remedies for breach of the contractual term as if he had been a party to the contract. He will be able to recover full expectation damages.

Cyril has available to him all the same remedies for breach of the contractual term as if he had been a party to the contract. He will be able to recover reliance damages to cover the money which he has expended, but he will not be able to recover in respect of any loss of profit which he has suffered.

Cyril has no direct remedy available to him and must wait until Barry returns from India to see whether Barry is willing to enforce the contract for him.

It is unclear on the facts which remedies, if any, will be available to Cyril

. There are a number of exceptions to the rule that a contract may not impose an obligation on a third party without the latter's consent. One of these concerns the purchaser of land or goods, who may in fact be affected by a contract concerning the land or goods and entered into prior to sale by the seller. What makes this rule particularly unconvincing in the case of goods rather than land? Select all that apply.

It attempts to impose on the purchaser a property right where there is no more than a personal right at issue as against the seller

It imposes obligations on a party who has no notice of these obligations

The retention of land which can benefit from the covenant is usually a necessary condition of the doctrine in Tulk v Moxhay (1848) 2 Ph 774

None of the options given are correct

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