Commonwealth Caribbean Business Law by Persadie Natalie Renée Ramlogan Rajendra & Rajendra Ramlogan

Author:Persadie, Natalie Renée,Ramlogan, Rajendra & Rajendra Ramlogan [Natalie Persadie]
Language: eng
Format: epub
Publisher: Taylor & Francis Ltd
Published: 2015-10-09T16:00:00+00:00

Among the majority Viscount Haldane, the Lord Chancellor asserted as a self-evident truth that ‘only a person who is a party to a contract can sue on it’: at 853. Today the doctrinal objection to the recognition of a stipulatio alteri continues to hold sway. While the rigidity of the doctrine of consideration has been greatly reduced in modern times, the doctrine of privity of contract persists in all its artificial technicality.

In 1937 the Law Revision Committee in its Sixth Report proposed the recognition of a right of a third party to enforce the contract which by its express terms purports to confer a benefit directly on him: Cmd. 5449, para 41 8. In 1967 in Beswick v Beswick [1968] AC 58, 72, Lord Reid observed that if there was a long period of delay in passing legislation on the point the House of Lords might have to deal with the matter. Twelve years later Lord Scarman, who as a former Chairman of the Law Commission usually favoured legislative rather than judicial reform where radical change was involved, reminded the House that it might be necessary to review all the cases which ‘stand guard over the unjust rule’: Woodar Investment Development Ltd v Wimpey Construction UK Ltd. [1980] 1 WLR 277, at 300G …

But as important as judicial condemnations of the privity rule is the fact that distinguished academic lawyers have found no redeeming virtues in it. See, for example, Markesinis (1987) 103 LQR 354; Reynolds (1989) 105 LQR 1; Beatson (1992) 44 CLP 1; and Adams and Brownsword (1993) 56 MLR 722. And we do well to remember that the civil law legal systems of other members of the European Union recognize such contracts. That our legal system lacks such flexibility is a disadvantage in the single market. Indeed it is a historical curiosity that the legal system of a mercantile country such as England, which in other areas of the law of contract (such as, for example, the objective theory of the interpretation of contracts) takes great account of the interests of third parties, has not been able to rid itself of this unjust rule deriving from a technical conception of a contract as a purely bilateral vinculum juris.

In 1991 the Law Commission revisited this corner of the law. In cautious language appropriate to a consultation paper the Law Commission has expressed the provisional recommendation that ‘there should be a (statutory) reform of the law to allow third parties to enforce contractual provisions made in their favour’: Privity of Contract: Conflicts for the Benefit of Third Parties, Consultation Paper No. 121, at 131. The principal value of the Consultation Paper lies in its clear analysis of the practical need for the recognition of a contract for the benefit of third parties, and the explanation of the unedifying spectacle of judges trying to invent exceptions to the rule to prevent demonstrable unfairness. No doubt there will be a report by the Law Commission in the not too distant future recommending the abolition of the privity of contract rule by statute.

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