LEGAL PRINCIPLE: CONTRACT LAW – Privity of Contract – Enforcement by Non-Party
PRINCIPLE STATEMENT
A person who is not a party to a contract cannot enforce it even if the contract was made for their benefit and purports to give them the right to sue upon it.
RATIO DECIDENDI (SOURCE)
"A person who is not a party to it cannot do so even if the contract was made for his benefit and purports to give the right to sue upon it."
EXPLANATION / SCOPE
This reinforces Principle 224 on privity. The privity doctrine means: only parties to a contract can sue on it, non-parties cannot enforce contracts even if: (a) made for their benefit (third-party beneficiaries), or (b) contract purports to give them rights. This strict rule serves: certainty in contractual relations, limiting liability to parties who agreed, and respecting party autonomy. The harshness affects intended beneficiaries who: were meant to benefit, contract expressly grants them rights, but they cannot enforce because they’re not parties. Limited exceptions exist: trusts (beneficiaries can sue trustees), agency (principals can sue on agents’ contracts), assignment (assignees can sue), and statutory exceptions. The general rule requires: contracting parties to enforce on beneficiary’s behalf, beneficiaries to seek alternative remedies (tort, unjust enrichment), or contract structuring to make beneficiaries parties. This principle, though criticized, remains foundational—only parties to contracts can enforce them, regardless of intended benefits or express rights purportedly granted to non-parties.