What does privity of contract mean, and how did the Contracts (Rights of Third Parties) Act 1999 modify it?

• A. Traditionally only parties to the contract could sue; the 1999 Act allows third parties to enforce rights where the contract expressly or impliedly benefits them.
• B. Privity means any third party can sue; the 1999 Act restricts this.
• C. The 1999 Act created privity for the first time.
• D. The 1999 Act only affects consideration.

Answer: (A)

Privity of contract means that, traditionally, only the people who are parties to a contract can sue on it or be bound by its terms. The Contracts (Rights of Third Parties) Act 1999 changes that by allowing a person who is not a party to the contract to enforce a term if the contract purports to confer a benefit on them, or if the contract expressly identifies them (by name or as a member of a class). In short, the Act expands who can enforce contractual rights when the contract intends to benefit a third party, rather than keeping enforcement strictly to the original parties. This matches the idea that third parties can enforce rights where the contract expressly or impliedly benefits them. The other statements don’t fit because the law did not create third-party rights universally, it did not bring privity into existence for the first time, and it is not limited to issues of consideration.