Contract Glossary
Privity
Definition
The legal relationship between parties to a contract. Only parties with privity — those who signed the contract — can enforce it or be bound by it. Third parties generally can't sue or be sued under a contract they weren't part of.
In Practice
If you hire a general contractor who subcontracts the plumbing, and the plumber does terrible work, you can't sue the plumber directly — you don't have privity with them. Your contract is with the general contractor. There are exceptions (third-party beneficiary clauses, warranties), but the default rule keeps outsiders out of the contract.
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Frequently asked questions about privity
Only if they're an intended third-party beneficiary — meaning the contract was specifically designed to benefit them. Life insurance is the classic example: the beneficiary didn't sign the policy but can enforce it. Incidental beneficiaries (people who happen to benefit) can't enforce the contract.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.