LAW OF CONTRACTS: Your Sword, Your Shield 9

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Hello!

In my previous post, I wrote about how contracts can be terminated by duress and undue influence.

Today, I am writing about how contracts can be terminated by illegal and void contracts and by privity of contract.

4. Illegal and Void Contracts

A contract will be rendered unenforceable for illegality if it has a criminal intent or connotation or for being contrary to public policy and morality. E.g.  A contract to procure girls for prostitution.

A contract will also be considered void if it is unreasonable and unenforceable from inception.

For example, if a husband instructs his wife to sign an undertaking that she will never carry on her career as a musician, that contract is void from inception.

5.Privity of contract: 

This principle means that a person who is not a party to a contract can neither sue or be sued on the contract.

Therefore, a third party cannot enforce a contract even if the contract was made on his behalf.

See the case of:

Dunlop Tyres v Selfridges (1915)

The plaintiffs sold tyres to Dew & Co. Wholesale distributors on the terms that Dew would obtain an undertaking from retailers that they would not sell below the plaintiff’s list price.

Dew sold some of the tyres to the defendants who retailed them below list price.

The plaintiffs sought an injunction and damages.

Held 
The action failed because although there was a contract between the defendants and Drew, the plaintiffs were not a party to it and only a person who is a party to a contract, can sue on it.

Consideration must also move from the promisee.

See the case of:

Tweddle v Atkinson (1861)

The fathers of a husband and wife agreed in writing that both should pay money to the husband adding that the husband should have the power to sue them for the respective sums.

Held 
The husband’s claim against his wife’s father’s estate was dismissed.

The court justified the decision largely because no consideration moved from the husband.

Examples of exceptions to the rule of privity of contract 

1. A principal may be entitled to enforce a contract entered into by his agent.
2. A spouse may be entitled to enforce and obtain the benefit of a life assurance policy made for the benefit of the other spouse.

In my next write up, I will move on to the various ways by which a contract can be discharged, that is, brought to an end.

Your comments and observations are welcome.

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Bye for now.