Exceptions to the doctrine of privity of contract, Business Law and Ethics

Exceptions to the doctrine of Privity of contract

Further there are a number of exceptions to the privity of contract rule of which the subsequent may be stated:

(a) Agency

However such a principal may sue on a contract made through an agent. This exception is perhaps more apparent than genuine because the principal rather than the agent is observe as the contracting party.

(b) Negotiable instruments

Through a holder in due course of a bill of exchange can sue prior parties thereto even if there is no privity of contract between him and any to them. But this is a statutory exception under the Bills to Exchange Act.

(c) Third party insurance

However a person injured in a car accident can sue the insurance company that insured the car against such risks though he is not a party for the contract between the owner regards the car and the insurance company. Then so this is an exception under the Motor Insurance as Third Party Risks Act.

(d) Covenants running with land

However the plaintiff, in order to succeed in the case, just prove to the court such he was induced to do what he did through the promise that the defendant made and that he would not have done what he did whether the defendant had not made the promise.  Such cases the plaintiff's act and the defendant's promise constitute actually a single transaction or bargain. whether the plaintiff performed the act before the defendant through the promise, the performance to the act would not constitute consideration to the defendant's promise.

Posted Date: 1/22/2013 3:04:10 AM | Location : United States







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