Privity and exceptions to privity in Scots Private Law: a new taxonomy
MacFarlane, Lorna Jane
The doctrine of privity of contract broadly provides that a contract should neither benefit nor burden parties external to the contract. This thesis can be divided into two parts: the first on privity itself, and the second on its exceptions. The first part contains a historical analysis of the development of privity, leading to the provision of a definition of privity in modern Scots law. It also examines whether privity is compatible with the leading theories of Scots contract law (will theory, promissory theory, and assumption theory) and considers the relationship between privity and third party rights. The interaction between privity and delict has proved controversial in various situations involving third-party loss. Accordingly, this part analyses the intersection between privity and delictual liability. The first part also identifies and assesses the policy considerations that have justified statutory exceptions to privity. It concludes with discussion on whether privity does and should continue to exist in Scots law. The second part provides a taxonomy of concepts which operate where: 1. There is an extra-contractual party 2. Which has suffered loss caused by non-performance or defective performance of a contract 3. And it lacks a contractual right to recover its losses 4. And the concept provides a means of recovery for the extra-contractual party, and/ or a means by which the contracting party which did not cause the loss can recover on behalf of the extra-contractual party. The four relevant concepts are: contracts for the benefit of another; transferred loss; ad hoc agency; and undisclosed agency. The thesis analyses each concept in turn, examining its relationship with privity, contract theory, and delictual liability. Policy considerations supporting each exception are identified and assessed. The conclusions of the thesis address whether these concepts can be recognised as justifiable exceptions to privity. The question of whether external network liability should be recognised as a new exception to privity is also considered. Whilst the thesis focuses on Scots law, comparative reference is made throughout to English law. This is because the development of contracts for the benefit of another, transferred loss, and undisclosed agency is closely intertwined in the two jurisdictions.