What is privity of contract and how has it been modified in modern law?

• A. Privity originally prevented third parties from enforcing contracts; the Contracts (Rights of Third Parties) Act 1999 allows some third parties to enforce where the contract expressly confers a benefit or intends to do so.
• B. Privity refers to the ability of the promisor to choose the form of consideration.
• C. Privity concerns the lawful capacity to sue in tort only.
• D. The 1999 Act abolishes privity of contract entirely.

Answer: (B)

Privity of contract means that only the people who sign a contract have enforceable rights and obligations under it; a third party normally cannot sue to enforce its terms. Historically that strict rule meant third parties couldn’t benefit from or enforce contract promises.

Modern law softened this with the Contracts (Rights of Third Parties) Act 1999. It allows a third party to enforce a contract term if the contract expressly confers a benefit on them or if the term purports to confer a benefit on them and the contract intends that they should have rights to enforce it. This creates a clear, limited exception to the old doctrine without abolishing privity entirely.

The other options miss the concept: privity isn’t about the promisor choosing the form of consideration, it isn’t about capacity to sue in tort, and the 1999 Act did not abolish privity altogether—it reformulates it to allow certain third-party rights.