1. SITI SUHAIDAH BINTI SAHAB Center for Construction Studies

2. PRIVITY OF CONTRACT  As a general rule, contractual rights and liabilities affect only the parties to the contract and a person who is not party can neither sue nor be sued on the contract (Ainah, 2005)  A contract cannot usually give rights or impose obligations on anyone who is not a party to the contract (Bone, 2001).

3. CONT…  It is a fundamental principle of common law that apart from special circumstances  A person who is not a party to a contract has no right to sue on the contract  Thus if A enters into a contract with B, only A & B can enforce or sue on the contract.  C who is not a party to the contract cannot do so

4. CONT…  Two common law principles:  He is a party  He gave consideration to the defendant in return for his promise  The position of third parties is that obligations under a contract cannot be transferred unless all the parties consent (tripartite)

5. Tweddale v Atkinson [1861] 121 ER 762

6. CONT…  Dunlop Pneumatic Tyre Co. Ltd. V Selfridge & Co. Ltd. [1914] AC 847)  In the contract Dew & Co. wholesalers, agreed to buy tyres from Dunlop.  They did so on the express undertaking that they would not sale below certain fixed prices.  They also undertook to obtain the same price-fixing agreements from their clients.  Dew sold tyres on to Selfridge on these terms but Selfridge broke the agreement and sold tyres at discount prices.  Dunlop sought an injunction.

7. CONT… Dew & CoDunlop Selfridge Would Not Sale Below Certain Fixed Prices

8. CONT…  Jus Quaesitum Tertio  A contract cannot confer rights on a third party and only a party to a contract can sue on it.  But rights may be conferred on third parties by way of trust, if so intended.

9. CONT…  Only binds the parties to a contract. A person not a party to a contract cannot:-  Recover benefits under the contract even though the contract expressly confer that benefits Tweddale v Atkinson [1861].  Have obligation imposed on him by the contact, even if he aware of it McGruther v Pitcher [1904] Adler v Dickson [1954]

10.  Exception  A third party may also be able to pursue a concurrent action in tort  Donoghue v Stevenson (1932)  An action may also be based on a collateral contract which may be implied (Ainah,2012).  A contract between two parties may be accompanied by a collateral contract between one of them or a third person within the subject matter.  Shanklin Pier v Detel Products (1951)

11. CONT…  Price v Easton [1833] 110 ER 518  Easton had agreed with a third party that if that third party did specified work for him he would pay £19 to Price.  While the work was completed by the third party, Easton failed to pay Price who then sued.  Price’s claim was unsuccessful.  He had given no consideration for the arrangement and was not therefore a party to the contract. How is it related to the construction industry? JOHN PRICE (P) WILLIAM PRICE EASTON (D) owe money work

12. REVIEW CHAPTER - VOID & VOIDABLE CONTRACTS