2 contract law assignments Essay Example | Topics and Well Written Essays - 3750 words

2 contract law assignments - Essay Example However, that right would have arisen by virtue of common law principles rather than statutory law as contained in the Contracts (Rights of Third Parties) Act 1999. Owen Fox explains that ‘for many years, the doctrine of privity of contract was a fundamental feature of English law, meaning that it was only the parties to a contract who could rely upon or enforce the terms of that contract. The consequence of this was that if a third party suffered a loss because the contracting parties failed to fulfil their obligations to each other, then the third party had no recourse under the contract.’2 This is the background against which Sarah Jones Development’s claim for damages against Archibald must be examined. There were and are exceptions to the privity of contract rule. One exception is to be found in circumstances where a collateral contract exists. For example when there is a contract between two parties one of the parties thereto may have a collateral contract with a third party in respect of the same matters contained in the primary contract. Shanklin Pier v Detal Products [1951] 854 provides a good example. In this case the plaintiff hired a contractor for the purpose of painting a pier. The painting contractor was instructed to purchase the paint from the defendants. The defendants informed the plaintiffs that the paint would last for seven years when in fact it only lasted for three months. As a result the plaintiff took the defendants to court despite the absence of a contract between them and defendants. 3 The court ruled that the plaintiffs could sue the defendants for damages on the basis of a collateral contract. The plaintiff had provided consideration in exchange for the defendants’ assurance of the quality of the paint by indorsing a contract with the painting contractor which specifically required that they purchase the defendants’ paint.4 The general tone of judicial findings was that there must be an intention to form a