Contract Law Exam Practice Essays Essay Example | Topics and Well Written Essays - 1250 words

Contract Law Exam Practice Essays - Essay Example In the case of Trident, an attempt was made to alter the Privity Clause around trust principles and did not succeed because it was only obiter dicta. The doctrine of Privity does not allow a third party such as a consumer for example, to sue a manufacturer who has produced defective goods – classified as vertical privity – or indeed sue a retailer who has sold him faulty goods via a friend who has purchased the product for him - this is a case of horizontal privity. This places the consumer at a great disadvantage, especially if the retailer has gone out of business and is unable to compensate for the defective goods - he cannot sue the manufacturer unless he can establish a collateral contractual relationship, which is possible only in rare cases (Carlill vs. Carbolic Smoke). Generally, the consumer would be considered a third party to the contract between the manufacturer and retailer and therefore deprived of any rights. Modern day transactions are rarely linear in nature. Financial and commercial transactions involve several parties and the Doctrine of Privity makes no allowance for the ramifications of multiple secondary and tertiary parties involved in contracts. But the Doctrine of Privity remains strong in Australian law and is a contentious issue, impeding recoveries from third parties. This is especially so in the case of subordinated debts, where the implementation of the â€Å"security cushion† provided by a senior creditor is impeded by the Privity Doctrine. Common law principles such as promissory estoppel offer scope for development in favor of third parties (Walton Stores vs. Maher). The introduction of Section 563c into the Corporations Law of 2001 has been ineffective in the face of the Doctrine of privity and further reform is necessary. In Queensland, some statutory modifications have been carried out to the Privity Principle at Section 55 of the