The principle of
privity in the
common law's
law of contract dictates that persons may not reap the benefits nor suffer the burdens of a contract to which they were not a party. Under the doctrine, if a consumer bought goods from a retailer who had originally bought them from the manufacturer, then, if the goods proved faulty, the consumer should sue the retailer. The consumer could not sue the manufacturer in contract law because no contract existed between them. The retailer could then claim against the manufacturer. In most cases, however, consumers may rely on the manufacturer's guarantee that will have been
assigned to them. In England, the leading privity case was
Tweddle v Atkinson [1861] EWHC J57 (QB), but this case immediately revealed the limits of the doctrine and two
Law Commission reports proposed reform. Finally, English law was amended by the
Contracts (Rights of Third Parties) Act 1999, which allows non-party beneficiaries of a contract to enforce the contract, substantially modifying the doctrine. However, the doctrine has not been completely abolished. In particular the question arises as to whether a third party (such as an
employee,
agent,
stevedore, or
freight forwarder) may rely upon an exemption clause limiting liability in a contact between two others. The matter was addressed in
Scruttons v Midland Silicones [1961] UKHL 4, where
Lord Reid gave guidelines which were subsequently followed in
New Zealand Shipping v Sattersthwaite [1974] UKPC 1. The cases of
Norwich CC v Harvey [1989] 1 WLR 828 and
Adler v Dickson [1955] 1 QB 158 also shed light on this area of law. ==US federal law==