The doctrine of the Privity of Contract is that a contract is based upon agreement between or among parties and therefore only the parties to that agreement have consented to contractual responsibility. .
There however exist contracts conferring benefits upon third parties. The common law reasoned that, first, only a promisee may enforce the promise, meaning that if the third party is not a promisee he is not privy to the contract. .
Thus if A promises B that, in return for a consideration provided by B, A will do something for C, C is not a promisee and is unable to enforce the promise. Secondly, there is the principle that consideration must move from C. Thus A may make a promise to both B and C, with a consideration provided by B, that he will do something for C's benefit. Here C is clearly a promisee but no consideration has moved from him, meaning C is unable to enforce the promise. .
The two principles of Privity and Consideration have become entwined, but the Law Commission has suggested that two separate policy issues can be identified, namely, the doctrine of privity has two aspects. The first aspect, which is the crux of our present discussion, is that, as a general rule, a person cannot acquire and enforce rights under a contract to which he is not a party. The doctrine of privity at common law is generally considered to have been established in Tweddle v Atkinson.
The court in that case held that, in the words of Wightman J, "no stranger to the consideration could take advantage of a contract though made for his benefit." .
That is to say, a third party to a contract, not having provided consideration himself, cannot enforce the contract even if it has been entered into for his benefit. .
The rule was affirmed in Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd, when the House of Lords accepted that it was a fundamental principle of law that only a party to a contract who had provided consideration could sue on it.
