At least on one occasion privity of contract (or the lack of it) has been described as an ‘original sin’ for international investment arbitration. Until the passing of the Contracts (Rights of Third Parties) Act 1999, English law did not permit parties not in a relationship of privity to sue on a contract. 1872, allows the ‘ Consideration ‘ for an agreement to … Privity of contract is the relationship that exists between the parties to an agreement. This is referred to as Privity of contract. Privity of Contract refers to relationship between the parties to a contract which allows them to sue each other but prevents a third party from doing so. It is a doctrine of contract law that prevents any person from seeking the enforcement of a contract, or suing on its terms, unless they are a party to that contract. Position of Privity of Consideration in England. The doctrine of privity of consideration states that the consideration must only move from the promisee and the stranger to the contract, although a beneficiary can enforce the terms of the agreement. Privity of contract. Privity of contract. privity of contract: the relationship between the parties privy to the contract, i.e. The rule is a common law principle that essentially states that someone who isn’t a party to the contract can’t benefit from it nor can they be held liable under the contract. This is referred to as Privity of contract. The Indian Contract Act. A stranger to the contract cannot enforce a contract even though the contract may have been entered into for his benefit. those who are direct parties to it. A contract between A and B cannot impose obligations on C. A contract between A and B can not be enforced by C, even if the contract is intended to benefit C. The doctrine of privity of a contract is a common law principle which implies that only parties to a contract are allowed to sue each other to enforce their rights and liabilities and no stranger is allowed to confer obligations upon any person who is not a party to contract even though contract the contract have been entered into for his benefit. Introduction. This relationship is necessary in contracts. The doctrine of Privity of Contract means that only those persons who are parties to the contract can enforce the same. Related Content. privity definition: a legal relationship that exists between two people or groups who have both signed a contract or…. The Indian Contract Act clearly states that there cannot be a stranger to a contract. What does this exactly mean? This is explained through the Doctrine of Privity of a Contract. Examples. It is the rule that no outsider to a contract can take advantage of a contract even if the contract is made for the outsider’s benefit.