CONTRACT LAW — Privity of Contract — Stranger Cannot Sue
Principle Statement
The doctrine of privity of contract portrays that as a general rule, a contract affects the parties thereto and cannot be enforced by or against a person who is not a party to it. In short only parties to a contract can sue or be sued on the contract and a stranger to a contract can neither sue nor be sued on the contract.
Ratio Decidendi (Source)
Per Adekeye, JSC, in Basinco Motors Limited v. Woermann-Line (2009) NLC-123-24-2003(SC) at p. 19; Paras B–D.
"The doctrine of privity of contract portrays that as a general rule, a contract affects the parties thereto and cannot be enforced by or against a person who is not a party to it. In short only parties to a contract can sue or be sued on the contract and a stranger to a contract can neither sue nor be sued on the contract."
Explanation / Scope
This principle establishes the doctrine of privity of contract: only parties to a contract can sue or be sued on it. A stranger to the contract cannot enforce or be bound by its terms. The principle applies in all contract claims. It ensures that contractual obligations are only enforceable by and against those who made them. The principle reflects the fundamental nature of contractual relations. It protects parties from claims by strangers. The principle has exceptions, such as agency, assignment, or third-party beneficiary statutes. The court must determine whether the claimant is a party to the contract. The principle provides certainty in contractual relationships.
