Privity Case briefs
Case name Facts
Jackson v.  Plaintiff booked a holiday with the
Horizon defendants for himself, his wife and
Holidays Ltd two small children at a price of 1,200/.
 Plaintiff made it clear that he wished
the holiday to be of the highest
standard and specifically requested
that the meals be four-course with a
choice of three or four dishes per
course
 Brochure issued by defendants
described the hotel as having
excellent facilities
 However, there were breaches of
these contractual terms
Woodar  Wimpey contracted to buy land for
Investment 850,000 pounds and agreed to pay
Development 150,000 on completion to third party
Ltd Transword Trade Ltd.
 Contract allowed purchaser to reject
contract if before completion a
statutory authority ‘shall have
commenced’ to acquire the property
by compulsory purchase.
 At date of contract, both parties knew
that a draft compulsory purchase
order had been made.
Issue Held
 Can plaintiff seek  Since plaintiff had contracted for the benefit of himself
damages for the loss of and his family, as well as recovering for own loss he
the holiday and could also recover for that suffered by his family as a
disappointment and result of the breach of contract. Therefore the
distress for himself, his damages awarded was not excessive.
wife and children?  It would be absurd to say that the children were
parties to the contract or that the father was making a
contract on behalf as if they were principals
(agencies)
 It would equally be a mistake to say that in any of
these instances was a trust – no trust fund and no
trust property.
 If Jackson can recover for the expense, he should
also be able to recover for the discomfort, vexation
and upset which the whole party have suffered by
reason of breach of contract, recompensing them
accordingly out of what he recovers.
 It may have been excessive if it was awarded only for
damage suffered by Jackson himself, but when
extended to wife and children, it is not excessive 
People look forward to holiday and expect promises to
be fulfilled, but when it fails, they are greatly
disappointed and upset.
 Was Woodar entitled to  Not a wrongful repudiation where a party was relying
claim damages on on a contract term to repudiate contract.
behalf of a 3rd party Obiter:
 Existing principle where an agent may sue on a
contract made by him on behalf of the principal if
contract gives him such a right is of no authority here.
o Jackson case was not decided correctly by
Lord Denning  “established rule of law” was
only extended to agent and trust. It was of no
authority in that case and even less in here.
o Even if it was, Woodar has not shown that it
was an agent or trustee for Transworld
  Wimpey purported to terminate relying o Where Woodar was not trustee or agent for
on provision, and Woodar claimed transworld, there are no principles upon which
damages including loss suffered by Woodar can recover damages for.
third party  Lord Keith: case of Jackson is rightly decided upon
reasonable view of the measure of damages due to
plaintiff as original contracting party. While there may
be a certain class of cases where third parties stand
to gain indirectly by virtue of contract, decision in
Jackson may not be supported by the true basis of the
ratio decidendi in Lloyd’s v. Harper, which rested on
principles of agency.
 Lord scarman: No relationship of trust/ agency proved
to exist between plaintiff company and Transworld
Trade Ltd.  While it suited Mr. Cornwell to split up
moneys payable under contract between two
company, not established on rationale of why Woodar
wanted money to be paid to Transworld  Woodar
had not suffered any loss as a result of the non-
payment.

Coulls v Bagot’s  Arthur Coulls died on 8th June 1960,  What rights were  Company owed no obligation as she wasn’t a party to
Executor and having made a will by which he created by writing agreement – contract made between plaintiff and
Trustee Co Ltd appointed Bagot’s Executor and signed by deceased, company.
Trustee to be executor and trustee. company and wife in  Company made no promise to pay wife and despite
 Arthur was owner of property known January 1959 and what wife signing, it did not make her a party to the
as Watergully and gave O’Neil effect has death of contract.
Construction Pte Ltd a right to quarry deceased had upon
and remove stone from propert, in any of those rights  (Dissenting)There was intention to create a legal
return getting a fixed minimum of 12  Can respondent relation between wife and the quarry company.
pounds per week for a period of 10 receive and hold the  Company is entitled and bound to pay for royalties to
years with an option of another 10 said royalties as her respondent
years at above the 12 pound minimum own and also take the
basis. full benefit of the Ratio Decidendi: (Dissenting)
 He authorised the company to pay all direction given in  Reference to survivor as “living partner “and
money connected with the agreement clause 7 of the will discussion in which both O’Neil and wife participated
to wife and himself as joint tenants.  What liability of the wife about person/ persons to whom the payment of
 In October 1963, mortgagees sued to the executor upon royalties should be made meant that there was an
executor for amount due for principal recovery of judgment intention to create legal relations between both
and interest under respective by mortgagees against parties.
appellant executor.
 mortgages, claiming contribution from
wife on footing she was joint debtor
with deceased and complete
indemnity from her on footing she was
now the owner. She sued the
executor for payments.
Shanklin Pier v.  Contractors were employed by
Detel Products plaintiffs, owners of a pier, to paint the
pier.
 The contract permitted the plaintiffs to
specify the paint the contractors were
to use.
 The defendant company told the
plaintiffs that the paint would have a
life of a least seven years.
 On the faith of these statements,
plaintiffs instructed the contractors to
use two coats of DMU but the paint
lasted 3 months.
 Plaintiffs brought an action in breach
of contract
The Albazero  Plaintiffs chartered the defendant’s
vessel for the carriage of oil.
 Carriage was covered by a bill of
lading which named the plaintiffs as
consignees
 In the course of the voyage the vessel
and cargo became a total loss.
 However, on the day before the loss,
plaintiffs endorsed bill of lading to a
third party: property in the goods and
the right to sue the defendants were
vested in the third party
 Plaintiffs, although having no property
in the goods at the date of breach of
carriage, sued the defendants for the
full value of the goods.
 Intended for wife to be the beneficiary due to his age
(75 at the time of making will while wife was 60)
 Survivor of Joint promisee can seek to enforce
promise.
 Can a third party sue  Plaintiffs could succeed because there was a
under a collateral collateral contract between the defendants and the
contract? plaintiffs based on the promise that the paint would
last seven years
 Consideration for this contract was the plaintiffs’
action in instructing the contractors to buy DMU from
defendants.
 Were plaintiffs entitled  Narrow ground:
to substantial damages  A party who has no property in the goods at the date
based on losses of breach has suffered no loss; however there are
sustained by third exceptions:
parties?  A plaintiff may be able to recover damages for breach
of contract for benefit of a loss of benefit to a third
party.
 The above rule is applicable in a commercial contract
concerning goods.
o Where it is in the contemplation of the parties
that the proprietary interests in the goods may
be transferred from one owner to another
after the contract has been entered into and
before the breach which causes loss or
damage, an original party to the contract is
entitled to recover by way of damages for

Linden Gardens  First plaintiffs St Martins Property
Trust Ltd v Corporation Ltd began to develop a
Lenesta Sludge site and entered into a building
Disposal Ltd contract with McAlpine.
 In 1981 part of the development, the
podium deck was found to be leaking.
Remedial works by Investment (who
Corporation passed the development
to) have been carried out at a cost of
some 800,000 pounds at the expense
of the Corporation.
 Corporation sued McAlpine for
damages.
 McAlpine submits that Corporation is
only entitled to nominal damages as
the Coporation as it had parted with
its interest in the property before any
breach of the building contract,
moreover Corporation received full
value for that interest on disposal to
Investment. While Investments
incurred damage, they had no cause
of action; Corporation has a cause of
action but suffered no loss  legal
black hole.
 Judge at first instance held that the
Corporation was not entitled to
substantial damages while CA held
that they were.
breach of contract the actual loss sustained y
those for whose benefit the contract is
entered into.
 Can Corporation sue  Narrow ground:
for damages on behalf  McAlpine entitled to substantial damages.
of the Investments?  Case fell within the rules laid out in Albazero.
 Contract was for a large development of property
which was known to both plaintiff and defendants that
it was to be purchased by third party  foreseen that
damage caused by a breach would cause loss to a
later owner and not merely to the original contracting
party (during the transfer).
 Parties entered into the contract on the footing that
Corporation would be entitled to enforce contractual
rights for the benefit of those who suffered from
defective performance but who, under terms of the
contract could not hold McAlpine for breach.
 Broad ground:
 Not logical that the recovery of substantial damages
be dependent upon plaintiff having a proprietary
interest in the subject matter of the contract at the
date of breach, simply because in everyday life
contracts for work and labour are constantly being
placed by those who have no proprietary interest in
the contract.
 E.g. Wife owns home while husband owns assets.
Husband contracts for contractor to fix damaged roof
but builder fails to replace roof properly. Absurd that
husband cannot sue as he has not suffered any “loss”
because he did not receive the bargain for which he
had contracted with the first builder and measure of
damages is the cost of securing the performance of
that bargain by completing roof repairs properly by
someone else.
 In cases such as the present, the person who places
the contract has suffered financial loss because he
has to spend money to give him the benefit of the
bargain which the defendant had promised but failed
 to deliver.
Darlington  Building contractor, Wiltshier, entered  Whether the St Martin’s  Narrow Ground:
Borough Council into a contract with MG (Local Property exception  Applying the St Marti’s exceptions, assignor (MG had
v. Wiltshier Authority Services) to construct a could be applied in this the right to recover substantial damages since it was
Northern Ltd recreation centre for the benefit of the case clear to contractor from the outset that the centre was
council who owned the land on which being constructed for the benefit o the council and
it was to be built. contractual rights were to be assigned to the council).
 It was necessary to employ MG  Since these contractual rights had been validly
because of restrictions on local assigned, council could recover substantial damages.
authority expenditure, but MG validly
assigned its contractual rights to the
council.
 The council sought to bring a breach
of contract action against the
contractor alleging that there were
serious defects which could costs
$2m to remedy.
 The council faced a problem in that a
person cannot assign greater rights
than he actually has.
 It was successfully argued at first
instance that MG only had a right to
recover nominal damages, since it
had no property interest in the
recreation centre, so that the council
was also restricted to nominal
damages.

Alfred McAlpine  A contract between Panatown and
v. Panatown McAlpine provided that McAlpine was
to construct an office building in
Cambridge.
 Actual owner of the site on which the
building was constructed was UIPL,
but UIPL was not a party to the
construction contract
 A separate duty of care deed was
entered into between McAlpine and
UIPL giving UIPL direct remedy
 Whether Panatown had Narrow Ground
a course of action  Under St. Martin’s, an employer could only recover
against McAlpine substantial damages for a third party building owner in
the event of the contractor’s breach of contract where
that third party had no direct remedy against the
contractor.
 Since there was a direct right to claim substantial
damages under the duty of care deed, Panatown had
no right to recover such damages for loss suffered by
UIPL. Panatown was only entitled to nominal
damages.
 against contractor for breaches of
qualified contractual terms.
 Panatown alleged that the
construction work was defective and
sought dmages.
 McAlpine argued that Panatown had
suffered no financial loss because it
did not own the site and in any event,
existence of duty of care deed gve
UIPL a direct right of action (which
UIPL chose not to enforce),
preventing recovery of substantial
damages by Panatown,
 CA applied narrow ground in St.
Martin’s to allow recovery of
substantial damages whch would be
held on constructive trust for the
building owner.
 Albazero exception will not apply where the parties
contemplate that the carrier will enter into separate
contracts of carriage with the later owners of goods,.
 followed in St. Martins where if the contractors
have undertaken liability to ultimate purchasers to
remedy defects appearing after property was
acquired, it will fall outside of the rule.
 As was held in Darlington Borough Council, where
there is a right to have an assignment of any cause of
action accruing to the employer against the
contractor, the exception may still apply so as to
enable the assignee to recover substantial damages.
 In present case, duty of care deed meant that
Panatown cannot be treated as having contracted
with McAlpine for the benefit of the owner or later
owners of the land and the exception is plainly
excluded.
Broad Ground [Lord Goff and Lord Millet]
 Broad ground – principal suffered loss simply because
it did not get what it bargained for and that the
damages was simply the cost of curing that shortfall.
Nothing to do with privity but relates to the standard
relationship between parties.
 Broad Ground can only not apply when plaintiff is
suing for damages incurred by a third party when no
contractual breach has taken place, where loss is
indeed the third party ‘s and not plaintiff’s  since
failure to perform what was promised by McAlpine in
the first place, that should not preclude Panatown
from suing them . If Panatown cannot recover here,
how can they recover if the building is not built in the
first place
 That using the broad ground, the plaintiff must use the
money to correct the defects or simply transfer the
money to the third party who suffered damage
 If they do, the practical possibility of double recovery
is almost nil and ok.
Family Food  In Family Food Court appellant was a
Court v. Seah firm trading under the name
Boon Lock aforementioned and operated a
number of food courts.
 First and second respondents, Seah
Boon Lock and wife Mdm Wee traded
as Boon Lock Duck and Noodle
House a chain of food stalls selling
duck rice
 Respondents’ business operated from
a number of locations. In particular, it
operated stalls located at two of the
appellant’s food courts – one at
Sungei Kadut and another at Yew
Tee.
 To carry on its business at these
locations, appellant had granted first
respondent Mr. Seah a licence for the
use of the Yew Tee Stall
 Concurrently, Mr Seah also took up a
lease for the Sungei Kadut stall.
 At some point of the relationship, as
the Sungei Kadut stall was not
generating enough business, Mr Seah
terminated the lease for the Sungei
Kadut stall. The appellant then
terminated Mr. Seah’s licence to
operate the Yew Tee stall, alleging
that the continued operation was pre-
conditioned on the continued
operation of the lease for the Sungei
Kadut stall.
 Contention was contested by Mr Seah
who then brought an action against
the Yew Tee licence
 At trial, Andrew Ang J found that there
was no such pre-condition, and
accordingly held that the appellant
had indeed breached the terms of the
Yew Tee licence.
 Obiter
 On appeal, Court of Appeal upheld trial judge’s finding
that the appellant had wrongfully repudiated Yew Tee
licence. That there was no undisclosed principal and
that Mr Seah was acting for himself when he signed
the agreement.
 Notwithstanding that further observations would
clearly be obiter dicta, Court of Appeal proceeded to
set out view as to what the legal position might have
been if the first respondent had indeed been acting as
an agent for an undisclosed principal – chiefly
because this would attract considerations on the
narrow ground and broad ground as there is a dearth
of case law in the local context.
 Clearly obita: Court of Appeal accepted that had Mr.
Seah been an agent for an undisclosed principal, but
for the possible application of the “broad” and the
“narrow” ground, Mr. Seah would only have been
entitled to recover nominal damages as he would
have suffered no loss on his own account.
Narrow Ground:
 Narrow ground is only applicable in the context of a
breach of contract where the third party to the contract
has no contractual remedy to recover substantial
damages against the contractual promisor; where it is
in the contemplation of the contracting parties that the
proprietary interest in the contractual subject matter
may be transferred from one owner to another after
the contract had been entered into but before the
occurrence of any breach.
 The narrow ground is not rendered inapplicable by the
availability to the third party of an alternative cause of
action against the contractual promisor in tort.
Broad Ground:
 Like the narrow ground, the broad ground applies only
in the context of a breach of contract, though on the
broad ground, the plaintiff would be recovering
substantial damages for its own loss and not on
behalf of the third party.
 The broad ground was however, constrained by an
  Complications arose from the
discovery in the course of the trial that
Mr Seah was not the owner of the
business operating at the Yew Tee
stall.
 Second respondent Mdm Wee had
been joined as a co-plaintiff to Mr
Seah’s action on the basis that she
was the undisclosed principal for
whom Mr. Seah had acted as agent in
relation to the Yew Tee licence.
 Andrew Ang J accepted that Mr. Seah
was acting for the undisclosed
principal, though that undisclosed
principal could not have been Mdm
Wee who was not the owner of the
Yew Tee business.
 Nevertheless, Ang J held that it was
not necessary for Mr. Seah in his
claim to reveal the identity of his
undisclosed principal before going on
to hold that Mr. Seah was entitled to
recover substantial damages for the
losses sustained by such undisclosed
principal in relation to the wrongful
termination of the Yew Tee licence
CLAAS Medical  
Centre v. Ng
Boon Ching
objective test of reasonableness as to the
performance interest claimed so as to curb what
would otherwise be a windfall accruing to the plaintiff
and to limit recovery only to instances where the
performance claimed was genuiune.
 Over and above the objective test of reasonableness
applicable to the broad ground, and the element of
contemplation or foreseeability required in the narrow
ground, both the broad and narrow grounds continued
to be subject to the traditional legal mechanisms for
controlling recovery for the breach of contract. (i.e.
mechanisms pertaining to causation of loss,
remoteness of damage, mitigation of loss and
requirement of certainty of loss)
 Broad and narrow grounds were conceptually
inconsistent and could not be applied simultaneously.
 Given the need for contemplation of transfer, the
narrow ground is not applicable in a case where the
third party is an undisclosed principal. It would not be
possible to argue that the loss of plaintiff/ promise was
to be seen as the loss of the third party/ principal
since the third party/ principal was undisclosed and
defendant/ promisor would not have known of him.
 CA made it clear that the burden of proof rests on the
party who invokes s 2(2) to show that on a proper
construction of the contract, that the parties did not
intend the terms concerned to be enforceable by the
third party
 The fact that a term in the contract permits the parties
to terminate does not mean that benefits conferred on
third party is not intended to be enforced by the third
party. 3(3) provides that for the parties to override the
rights acquired by the third party based on the party’s
reliance, the contract must expressly provide that the
parties may rescind/ vary contract without consent of
third party
 Presence of an anti-assigment clause which
prohibited the assignment of rights and benefits under
the contract was not, in itself, relevant to the question
as to whether the parties had intended for the third
party not to be entitled to enforce the term in question
 The ascertainment of requisite intention was a matter
of construction of contract
 Although the third party was a corporate entity (a
distinct and separate entity from its shareholders),
each of whom had been a signatory to the contract in
which the term in question was to be found, the
finding by the court which the term in question was to
be found, did not rebut the presumption that the
parties intended the term to be enforceable by third
parties
 Only matters forming part of the factual matrix upon
which the contract was entered into were relevant for
the purposes of ascertaining the presence of an
intention not to permit the third party to enforce the
term in question.