Also known as:privity barriers · privity of contract · lack of privity
Written by attorneys · grounded in primary & secondary sources — see below
A doctrinal rule that limits enforcement of obligations or imposition of liability to parties in direct contractual or estate privity. The rule prevents third parties from asserting claims or enforcing duties arising from a transaction or agreement to which they were not a party.
Sources & Authorities
How it applies
Common Examples
3
Original Tenant Remains Liable
Republic Connect leased rooftop space from Liberty Communications and promised in the lease to avoid interference with other tenants. Republic Connect assigned the lease to West Broadband with Liberty's written consent but without any release of Republic Connect. After the assignment, West Broadband's equipment caused interference. Liberty sued Republic Connect for breach. Because the promise rested on privity of contract, Republic Connect remained obligated despite the transfer.
Transferee Liability Persists
Apex leased lab space to NovaPharm and promised to maintain ventilation systems. Apex sold the building to Helix, and Helix promised to perform the lease covenants. Helix later failed to maintain the systems. NovaPharm sued Apex. Because Helix had promised performance, its liability rested on privity of contract, so Apex's original contractual duty continued after the sale absent a release.
Select any source to read its text and confirm it supports the definition.
Restatements
Casebooks
Intended Beneficiaries Sue Attorney
An attorney drafted a will for a client that left property to the client's grandchildren. The drafting contained an error that invalidated the bequest. The grandchildren sued the attorney for negligence. The court allowed recovery even though the grandchildren lacked privity with the attorney because the harm was foreseeable and no other party could enforce the duty.
Lucas v. Hamm364 P.2d 685, 690 (Cal. 1961)
Common questions
Frequently Asked
4
Does a landlord's consent to an assignment automatically release the original tenant from lease covenants?+
No. Consent alone does not relieve the original tenant. The tenant remains bound on privity of contract unless the landlord expressly or functionally relieves the tenant of the obligation.
Supporting sources
When does a transferee of a lease become liable on the original tenant's covenants?+
A transferee becomes liable when the promise touches and concerns the leased interest, the parties intended the burden to run, the transferee is not relieved of the obligation, and the transfer creates privity of estate with the party entitled to enforce the promise.
Supporting sources
Why do some courts refuse to let intended will beneficiaries sue a drafting attorney?+
Courts apply the privity barrier to preserve the attorney's duty of loyalty to the client and to avoid exposing attorneys to unlimited liability from non-clients.
Supporting sources
What policy supports allowing intended beneficiaries to recover despite lack of privity?+
Recovery prevents the harm from going unremedied because only the intended beneficiaries suffer the loss and the attorney could foresee the injury.
Supporting sources
364 P.2d 685 (Cal. 1961)Torts
…was liable, and the absence of the factor in the present case does not justify reaching a different result. It follows that the lack of privity between plaintiffs and defendant does not preclude plaintiffs from maintaining an action in tort against defendant. Neither do we agree with the holding in Buckley that beneficiaries…