PRIVITY. In the case at hand, The Mansion Society (M.S) is currently faced with two problems; first, the quality of service offered by Nonentity buses (N) is not satisfactory and Secondly, Letitia (L) has varied the contract with Nonentity buses by reduc

However, The Mansion Society may have some difficulty bringing an action against Nonentity buses under the common law as they are not the contracting party, but a third party beneficiary; since the common law doctrine of privity stipulates that ‘a contract cannot confer rights or impose obligations arising under it on any person except the parties to it’. To thwart an action by Mansion Society, Nonentity buses may rely on the case of Tweddle v Atkinson, were Wightman J said ‘It is now established that no stranger to the consideration can take advantage of a contract, although made for his benefit’. They (N) may also rely on Dunlop v Selfridges where it was stated that ‘one of the fundamental principles of the law of England is that only a person who is party to a contract can sue on it’.  Discussing both cases, Flannigan suggests that the doctrine of privity is simply an aspect of the doctrine of consideration. He argues that ‘to say a person is not party to a contract, is the same as saying they have not provided consideration; as a result, they cannot sue on the contract’. On the other hand, this can be described as the traditional approach, and is countered by Lord Denning’s judgement in Smith and Snipes Hall Farm LD v River Catchment Board; ‘the common law recognizes third party rights to sue upon a contract, if the contract was expressly made for his benefit, and it was intended to be enforceable by the third party’, using this The Mansion Society can bring an action against Nonentity buses. Another option for The Mansion Society would be to rely on the Contracts (Rights of Third Parties) Act 1999, and sue upon the contract in their own capacity.  Section 1 (1)of the Contracts (RTA) Act 1999 allows a third party to enforce a term of the contract if the contract expressly provides that he may, or if it purports to confer a benefit on him. In addition, S.1 (5) of the Contracts (RTA) Act 1999 provides the third party with all remedies available to a contracting party. According to MacMillan, under the Act, the third party will be entitled to enforce the contract unless the contracting parties can show that they did not intend to confer a benefit. From the facts provided, there is no indication in the contract that the parties did not intend to confer a benefit upon The Mansion Society. Moreover, The Mansion Society can posit that the parties explicitly created the contract for their benefit. To substantiate this, The Mansion Society can cite the clause in the contract which provides compensation to them, if the buses provided by Nonentity are late or delayed, “…………….,Mansion Society will receive compensation for such a failure”.

To determine the level of breach under the common law, it would be prudent for The Mansion Society to use the test set out by Upjohn LJ in Hong Kong Fir Shipping Co. Ltd v Kawasaki Kisen Kaisha; ‘does the breach of the stipulation go so much to the root of the contract that it makes further commercial performance of the contract impossible, or in other words is the whole contract frustrated? If yea, the innocent party may treat the contract as at an end, if nay, his claim sounds in damages only’. Using this test, it appears that although the service offered by Nonentity buses is not satisfactory, the contract is not frustrated. Nonentity buses may use the fact that they are never late to support this argument, and oppose a claim for breach of contract. Thus, under common law, the preferred option for The Mansion Society will be to sue for a breach of warranty and claim damages. Also, Mansion Society cannot sue under statute as a result of S.7 (4) of the Contracts (Rights of Third Parties) Act 1999 which precludes third parties from suing under any other Act.

Another option open to Mansion Society would be to sue Nonentity buses for specific performance. In Ryan Air v SR Technics Ireland Ltd, the plaintiffs relied on the contract, and had acted in accordance with the terms. As damages were not an adequate remedy for the breach they suffered, an order for specific performance was granted. With reference to this case, The Mansion Society may argue that damages would not be an adequate remedy, as they have relied on the contract to transport their patients to the leisure centre. As a result, they can sue to compel Nonentity buses to improve the condition of their buses. This however, would be a doubtful claim as the threshold for ordering specific performance is high.

Following on from this, as regards to the variation of the contract, Letitia and Nonentity buses require the consent of Mansion Society as prescribed by S.2 (1) Contracts (RTA) 1999.Giving that The Mansion Society have been using the service;  Nonentity buses are aware that they have relied on the contract. Although, the act provides the promisor with some defences, it does not allow the contracting parties to vary or rescind the contract without the consent of the third party. According to MacMillan, while the Act gives effect to the intentions of the contracting parties, it does so in such a way as to protect the third party. MacMillan goes on to state that it is for the contracting parties, while constructing the contract, ‘to give themselves the ability to vary or rescind the contract without the consent of the third party, or determine for themselves when the consent of the third party is required (s2(3)). From the facts provided, the contract between Letitia and Nonentity buses does not seem to contain any provision allowing them to vary the contract without the consent of the third party. Thus, to vary the contract, Letitia needs the consent of Mansion Society and unless they(M.S) are willing to reduce the frequency of the service, the contract terms must remain the same.

As a final point, the most certain remedy for Mansion Society would be to sue Nonentity buses for a breach of contract term or warranty. Nonetheless, The Mansion Society should subsequently sue under the Contracts (Rights of Third Parties) Act 1999, as this is sure to get them an award of damages. As regards variation of the contract by Letitia, the Contracts (Rights of Third Parties) Act 1999 does not permit the contracting parties to vary or rescind the contract without the consent of the third party. Hence, Letitia will loose the right to vary the frequency of service as she did not consult the approval of The Mansion Society as specified under the act.

                                                Bibliography (References)

• Cheshire, Fifoot and Furmston’s  Law of Contract (London, Reed Elsevier: 2001)
• Contracts (Rights of Third Parties) Act 1999
• Dunlop Pneumatic Tyre Co. Ltd v Selfridges & Co. Ltd (1915) AC 847 HL
• Flannigan, R. Privity-The end of an Era (error) (1987) L.Q.R. 564
• Hong Kong Fir Shipping Co. Ltd v Kawasaki Kisen Kaisha (1962) 2 QB 26 CA
• MacMillan C. A Birthday for Lord Denning, The Contracts (Rights of Third Parties) Act 1999. (2000) M.L.R 721
• Poole p. Textbook on contract law. 9thedn(OUP 2008) pg 445
• Ryan Air v SR Technics Ireland Ltd (2007) All ER D
• Smith and Snipes Hall Farm LD v River Catchment Board (1949) 2 KB 500
• Treitel, The Law of Contract (London, Sweet and Maxwell: 2007)
• Tweddle v Atkinson (1861) 1 B & S 393; 121 ER

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