Moneyzine
Contents

Privity

Moneyzine Editor
Author: 
Moneyzine Editor
1 mins
September 25th, 2023
Advertiser Disclosure

Definition

The term privity refers to common law that states a contract only provides rights and imposes obligations to the parties agreeing to it. The doctrine of privity is an important concept in the laws governing contracts.

Explanation

The common law doctrine of privity is interpreted to mean that only the parties to a contract are able to enforce their rights under it. This doctrine is frequently cited when determining who has a right to bring about a lawsuit for damages or impose their rights within a contract. Privity is problematic for third party beneficiaries, since they are unable to enforce the obligations of those parties named in a contract.

Example

Bill decides to lease a car from the Rents-R-Us automobile dealership. Unfortunately, the car performs poorly and spends more time in the repair shop then on the road. Under the principles of privity, Bill cannot bring about a lawsuit against the manufacturer of the car, because they were not a party to the contract between Bill and Rents-R-Us. In this example, Rents-R-Us would have to sue the car's manufacturer on behalf of Bill for the sale of a faulty automobile.

Related Terms

Related Content

How to Make a Million Dollars in 10 Years
Truthfully, this title should actually be “How to Make a Million Dollars in 10 Years Without Going Into Debt", but that is just getting a little too winded for my liking. It’s true though!
March 26th, 2024
How to Apply Maslow’s Hierarchy to Your Money This Year
You might vaguely remember your psychology teacher talking about Maslow. He pointed at a picture of a triangle as you nodded off in the back of the school room.
March 27th, 2024
How to Tackle Multiple Savings Goals
When there’s only so much money to go around, there are often multiple savings goals competing for your money. Think of the young professional who’d like to get a more reliable car, buy a house, and save for retirement. Or consider the young family that’s saving for college, retirement, and a bigger house.
March 22nd, 2024
The Countdown to Early Retirement: 10 Expenses to Eliminate
Dreaming of waving goodbye to the daily grind five years ahead of schedule? The road to early retirement is paved with more than good intentions; it requires a meticulously crafted strategy with surprising twists. It's not solely about what you should be doing—like diligently saving a portion of your income or investing wisely—but also about what you need to stop doing.
March 22nd, 2024
What’s Your One Page Financial Plan? Mapping out Your Future
“What’s your one page financial plan?” — This is the absolute best question that I’ve heard asked in a long time. Instead of talking about your hot stock pick or your fancy investment that shields you from paying taxes, I think it’s time for all of us to step back and ask ourselves the most intelligent question of all, “Why the heck do I care about money anyway??”
March 14th, 2024

Contributors

Moneyzine 2024. All Rights Reserved.