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Introduction
The doctrine of privity is the relationship between the parties to a contract. Only parties to the contract are bound by it and are able to meet contractual obligations under the contract. The concepts of novation and assignment, but not exceptions to this rule, are contrary to the principles contained therein and have developed to circumvent the restrictions imposed by the doctrine.
Link Contract
The principle that a person can not enforce the obligations under a contract which is not party to been established in the case of Tweedle v Atkinson (1861) 1 B. & S. AB 393 which promised to pay a sum of money to the son of B, C during his marriage to the daughter of A's. It was found that C could not enforce the promise made by A to B to pay him, as he was not party to the contract.
This was reaffirmed in the case of Dunlop Pneumatic Tire Co Ltd v Selfridge & Co Ltd [1915] AC 240, 246, where Viscount Haldane LC said that "… the law of England certain principles are fundamental. The first is that only a person who is party to a contract can sue on it. "The governing principle is contemporary Beswick Beswick V [1968] AC 58.
Despite the volume of case law that reaffirms this principle, the doctrine has been and remains the subject of court proceedings is far from being popular as demonstrated in Darlington Borough Council cons Wiltshier Northern Ltd [1195] 1 WLR 68, 76, where Steyn LJ expressed his dissatisfaction with the rule and the many drawbacks is the cause.
Novation
The concept of innovation follows Roman law and that's where all the debts and obligations under a contract, whether the transfer of the benefit or burden of a contract may be transmitted to third as long as all parties agree. When this happens, the original contract between the debtor and the creditor is canceled and is replaced by a new contract between the debtor and third parties. Consideration must be given in respect of the new contract and is usually considered the discharge of the original contract and contractual obligations of the creditor. For example, if A is B money and all parties agree that C will pay money to B, not A, examination of B to C agrees to release one of its commitments and consideration of A is to provide the new debtor, C.
Assignment
Novation can be distinguished from the assignment. A party to a contract (the assignor) is capable of transferring the benefit of a benefit to be received under this contract to another person (the transferee) which is capable of imposing the implementation of its own, without the consent of the other party (the debtor). For example, when a contract exists between A and B and B affects the benefit of the contract to C, it can then be applied against A.
Regarding the assignment of the burden of a contract, the general rule is that this can be done if the creditor's consent, as Collins MR in v. Tolhurst Associated Portland Cement Manufacturers (1900) Ltd [1902] 2 KB 660 to 668, said: "That, I think, quite clear that neither in law nor in equity could the burden of a contract are removed from the shoulder of a contractor to those of another without the consent of the performer. A debtor can not discharge his responsibility to his creditor by assigning the burden of obligation to someone else, which may be caused by the consent all three, and involves the release of the original debtor. "
Conclusion
As it stands, the doctrine of privity of contract are not part of the principles governing contract law. In recent years, the rigor of this principle has been mitigated by the Contracts (Rights of Third Parties) Act 1999. Contracts (Rights of Third Parties) Act 1999 has relaxed the application of the doctrine of so that a person or class of persons are able to enforce a contract without being a party to the contract that confers an advantage on them, alternatively, the contract may expressly provide for third parties. The effect of this Act is generally excluded professionals to avoid href = "http://www.gillhams.com/legalservices/contractlawyers.cfm"> contract disputes with persons not parties to the agreement.
The concept of novation and assignment may be covered in the contract itself as a means of circumventing the limitations of the contractual relationship, even if they are not considered as exceptions to the rule itself.
About the Author:
Leigh Ellis is a London lawyer advising on business disputes and contract law with commercial law firm, Gillhams Lawyers in London. Gillhams law firm provides commercial legal advice to international businesses from London, UK
Article Source: ArticlesBase.com – Difference Between Privity of Contract, Novation and Assignment Under UK Law
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