Also known as: privity · contractual privity
Written by attorneys · grounded in primary & secondary sources — see below
The legal relationship between the parties to a contract that permits them to enforce the agreement against each other but generally bars third parties from doing so.
Pavel Petrov leased a warehouse from Pioneer Energy under a lease requiring him to maintain the roof. Pavel assigned the lease to Peak Performance without obtaining a release from Pioneer Energy. After the assignment Peak Performance failed to repair a leak and Pioneer Energy sued Pavel for the resulting damage. Because Pavel remained in privity of contract with Pioneer Energy he stayed liable on the original covenant even though privity of estate had ended.
Penelope Price bought a newly built home from Phoenix Technologies. Two years later she sold the home to Pablo Perez. After discovering structural defects Pablo sued Phoenix Technologies for breach of the implied warranty of habitability. Because Pablo lacked privity of contract with Phoenix Technologies the court held that he could not enforce the warranty directly against the original builder.
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Pierce Patterson occupied a strip of land adversely for five years then conveyed his interest to Peter Park who continued the adverse use for another seven years. When the record owner sued to quiet title Peter sought to tack the periods. Because privity existed between Pierce and Peter the periods combined to satisfy the statutory requirement.
Paragon Construction owned two adjacent parcels and granted a right-of-way across one parcel to a neighboring owner who held no prior interest in either parcel. The neighbor recorded the grant. Because no privity relationship between the parties is necessary to create a servitude the right-of-way bound subsequent owners of the burdened parcel.
Pilar Pena leased retail space from Peak Performance under a lease requiring the tenant to keep the premises in good repair. Pilar assigned the lease to Phoenix Technologies. The assignment brought Phoenix Technologies into privity of estate with Peak Performance. Because the repair covenant touched and concerned the leased property Phoenix Technologies became obligated to perform it.
Pablo Perez bought a car from a dealer. While driving the car a defect in the steering mechanism caused an accident that injured a pedestrian. The pedestrian sued the manufacturer for negligence. Because the manufacturer owed a duty of due care to any foreseeable plaintiff the absence of contractual privity did not bar the pedestrian's claim.
No. Intended third-party beneficiaries may enforce the promise even without privity of contract when the contracting parties intended to confer the benefit on the third party.
Yes. The original tenant remains in privity of contract with the landlord and therefore stays liable on the covenants unless the landlord expressly releases the tenant.
Courts are split. Some jurisdictions allow the claim while others require privity of contract and therefore bar the subsequent purchaser from suing the builder directly.
No. A servitude may be created without any privity relationship between the parties.
No. A manufacturer owes a duty of due care to any foreseeable plaintiff regardless of contractual privity.
…U. S. 343; Baker v. Baker, Eccles & Co., 242 U. S. 394. But we have no such situation here. The trustee of the trust was in privity with the deceased. She was the settlor; and under the trust, the trustee was to do her bidding. That is to say, the trustee, though managing the res during the life of the settlor, was on…