Question 1

Can a third party enforce a contract they didn't sign?

Accepted Answer

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.

Question 2

Why does privity matter?

Accepted Answer

It determines who you can sue and who can sue you. Without privity, you can't bring a breach of contract claim against someone — even if they caused your loss. This is why contracts between businesses often include language about subcontractors and third-party rights.

Question 3

What's the privity rule for product liability?

Accepted Answer

Product liability has largely moved beyond privity. In the U.S., manufacturers can be sued by anyone injured by their defective product, regardless of privity. You don't need to have bought directly from the manufacturer. This shift happened through landmark cases like Henningsen v. Bloomfield Motors.

Question 4

Can I create privity with a subcontractor?

Accepted Answer

Yes, by entering into a direct contract with them. You can also include assignment rights in your main contract that allow you to step into the contractor's shoes regarding subcontractor agreements. Another option: require the contractor to include third-party beneficiary clauses in subcontracts.

Question 5

Does privity apply to warranties?

Accepted Answer

Traditionally yes — only the buyer could enforce a warranty. But the UCC and many state laws have expanded warranty rights to cover household members, guests, and others who might reasonably use the product. Manufacturer warranties often run directly to end users, creating privity by design.

Privity

Definition

In Practice

Common in these contract types

Related terms

Frequently asked questions about privity

Create a contract with proper privity clauses