Privity

Abstract

This chapter discusses privity rules. Privity rules in contract law prevented obligations created by a contract from protruding on third parties, while privity rules in tort law prevented obligations to third parties that might otherwise be imposed by tort law from “indenting” upon a contract. Contract no longer is an impregnable circle of obligation. But contract law still has a privity requirement that prevents a contract from protruding negatively on nonparties. Meanwhile, in tort law, the function of preventing negligence law from indenting upon a contract has devolved to rules that preclude a negligence claim for pure economic loss. Moreover, there are rules in property law and the law of restitution that perform the same functions as the old privity rules in contract law and negligence. These include bona fide purchaser rules in property law and rules in the law of restitution that preclude claims for indirect enrichment and that preserve the priority of contract as a mechanism for resolving problems of unjust enrichment.