Privity of contract Essay

n. p). As a general rule, this doctrine exempts the rights and obligations of the contract from anyone who is not a party to a contract. Therefore, it is important to establish whether QuickSnaps is a party to the contract entered between Fixit and Best. To establish whether the rules of Privity of the contract would allow QuickSnaps to sue Fixit, two common law reasoning will be used. ” Therefore, under this reasoning, QuickSnaps cannot sue Fixit under the Privity of contract. The second rule established by the common law is that there must be a consideration that moves from the promisee to the promisor. In Tweddle v. Atkinson (1861), both the fathers of the wife and husband entered into a written agreement that they should both pay the husband and bequeath the him with the power to sue them to recover the sums.

Later on, the husband brought a claim against the estate of his wife’s father. Detel Products (1951) where contractors had been employed to paint a pier by the plaintiffs. The plaintiff succinctly directed the contractors to use a paint that had been manufactured by the defendants relying on the defendants’ indication that a minimum of seven years was the paint to last. However, the paint lasted only for three months, and plaintiff brought a legal claim. The court in its opinion indicated that the plaintiff under the eyes of the law had a collateral contract with the defendants thus able to sue them. As a requirement by the common law that such third party must have made a consideration, the court indicated that a similar consideration had been paid to the contractors relying on the defendant’s promise.

The intention to create a legally binding contractual relation was established in Esso Petroleum v. Customs & Excise (1976). In this case, Esso Petroleum had a promotion to every customer who bought four gallons of petroleum. The promotion gave the customers from their (Esso Petroleum) World Cup Collection free coin. The question before the court was whether Esso coins were produced for purposes of general resale and if that was the case, Esso would be liable to pay tax amounting to $200,000. Additionally, Pratt (2014, pg. 7) states that disclaimers are sensitive in cases where it has been qualified by both parties to the contract, however, in the case of Best and Fixit no such qualification was made at the time of entering into a contract.

There is a presumed assumption that parties to a contract must disclose every material fact that pertains to such contract including Fixit website disclaimer. However, it is important to consider the position of the common law right of information disclosure by parties to a contract. The common law general rule to disclosure indicates that an individual contemplating to enter into a contract with another is not under any obligation to disclose information to the other person. In Pan Atlantic Co. Ltd v. Pine Top Insurance Co. Ltd (1995), the court indicated that there must be a logical connection between the fact and the transaction. Therefore, the disclosure of a disclaimer by Fixit to avoid liability for damages or any loss was important and necessary in order to bind Best.

This type of damages is also known as actual damages and covers any loss that the non-breaching party to the contract suffers as the contract breach (Al-Tawil, 2013, pg. As enumerated from the case study, Best incurred a loss of $75,000 as result of Fixit failure to supply the exact content described in the contract agreement thus liable for any loss incurred out of their failure which was the loss of customers and extra expenses incurred by Best. The first step in determining whether Best will successfully claim $75,000 as damages based on the contract breach is the application of the principle of causation. According to this principle, the claimant must show a connection between the contract breach and the economic loss. This principle was precisely enumerated in Monarch Steamship Co Ltd v Karlshamns Oljefabriker (1949) where the court indicated that war outbreak was not a sufficient reason to break the causation chain.

This is the expectation interest. Therefore, it is evident that the aim of damages in the contract is not to punish but to position back the aggrieved party where they would have been if the contract was performed. In calculating in the award of damages and in this case to determine the amount of $75,000 by Best is a reasonable the court can opt to judge it in the consideration of the loss which the injured party has suffered. In this case, the award of $75,000 claimed by Best includes part of the profit that they intended to make in part of their dealing with QuickSnaps. This loss is directly arising out of the breach of contract thus Best should claim the amount.

It is the duty of the claimant to ensure that necessary steps have been taken to ensure that any reasonable loss is reduced. In Payzu v. Saunders (1919), the court indicated the claimant could not receive the award of damages for failure to purchase at a discounted price. The court opined that the claimant was under a duty to ensure that reasonable steps have been put in place to mitigate the loss out of the contract breach. However, in the case of Best and Fixit, there is no sign on the part of Best mounting up the loss. In the case of Energy International (PVT) Ltd. Richmond Mercantile Limited FZC (2016), the court was faced with the question whether a party to a contract which is exercising the common law rights of termination is still required to comply with the provisions of contract termination.

However, in this case, the contract between Best and Fixit Brothers had no such provisions. In cases where there is no an express provision to terminate the contract by either of the parties, the consideration of the contractual term of breach should be done for purposes of determining whether a breach has risen. Even in the absence of an express term in the contract that allows the parties to terminate the contract, contractual terms are classified as a condition that permits any of the contracting parties to terminate the contract. Under anticipatory repudiatory breach, one of the parties through their actions or words may expressly or impliedly demonstrate lack of intention to fulfill their contractual obligation (Wilson, 2009, pg. The award of anticipatory breach damages was given in the case of Hochster v.

De La Tour (1853). The court, in this case, held that one of the party’s refusals to perform their contractual obligation held them liable for a contract breach. Moreover, the court also opined that in cases of future contracts, there is an implied promise in the contract that the parties will prejudice a promise performance. Gjelsten, K. E.  Pre-contractual Duty to Disclose Information-A Comparison Between Norwegian and English Contract Law (Master's thesis). Harris, D. , Campbell, D. Legal aspects of business. New Delhi, PHI Learning. Pratt, M. G. Disclaimers of Contractual Liability and Voluntary Obligations. Yeo, T. M. When Do Third Party Rights Arise under the Contracts (Rights of Third Parties) Act 1999 (UK).  SAcLJ, 13, p. List of cases Dunlop Tyre Co. Pine Top Insurance Co.