In Privity: Everything You Need to Know
When someone is in privity, it means that they have entered into a contract with another person. Another way to understand privity is as a connection between two people. 3 min read
When someone is in privity, it means that they have entered into a contract with another person. Another way to understand privity is as a connection between two people.
What is Privity?
In its most basic form, privity is a link between two parties. However, privity can also be used to refer to a contract or to the mutual interest of two people. Privity is one of the most important terms in contract law. These laws require that privity exists so that one party has the ability to file a lawsuit against the other party if they fail to fulfill their contractual duties.
For example, imagine that you are a tenant of a piece of property that someone else has purchased. If there was a contract stating that the person that sold the property was required to make certain repairs, and the seller did not fulfill the obligation, you would not be able to sue the seller because you were not in privity with this person. Instead, the other party named in the contract, the buyer, would need to bring the lawsuit.
Privity can also mean a mutual relationship that is related to the rights of property. The legal relationship created by privity can take several forms, including:
- A contract.
- An estate.
- Some other lawful status.
When privity exists, both parties will have certain rights, as well as the ability to enforce those rights. For instance, with privity, both parties in the contract will be able to use a lawsuit to either force the fulfillment of the contract or to receive remedies for a breach of contract. Privity can exist long term or can be created when two parties are bonded together for one specific transaction.
Two people, for instance, could have a legal relationship because that have an interest in the same piece of property. Privity can also occur when a non-contracted party has an interest in a legal action or transaction because they have developed a relationship with one of the parties who is listed in the contract. A purchase, for example, is a form of privity, because there are two people, a buyer, and a seller, who are involved in the transaction.
Mutual interests also create privity. A good example of this would be an inheritance that is awarded to two people. Since both parties have an interest in the inheritance, they would be considered to be in privity.
Direct participation is not always a requirement for privity to exists. For example, you could have a relationship to one of the parties, as in the spouse of someone named in the inheritance. You could also have an identical interest to one of the people named in the contract. In these cases, you would be in privity even though you were not named in the original contract.
While privity will almost always involve a contract of some form, it can also result from a less formal relationship. If two people have joint or private knowledge of a matter that is private, then they are considered to be in privity.
What is Privity of Contract?
In most cases, in privity refers to a privity of contract. This is when two parties are bound by a contract, meaning they are obligated to each other in some way.
Privity is essential to a contract. If privity does not exist, meaning there is no relationship between the two parties, there will be no way for the contract to be enforced. This means that if there a breach of contract, the lack of privity would prevent the damaged party from filing a lawsuit against the party that broke the contract.
What is Privity of Estate?
There is another type of privity that is known as privity of estate. In general, this type of privity relates to real estate. For example, the relationship between lessees and lessors is considered privity of estate. The connection between a lifetime tenant and a reversioner is also a form of privity of estate. A release by enlargement requires a privity of estate to be enforced.
What is Privity of Blood?
The relationship between an ancestor and their heir is called a privity of blood. In most cases, privity of blood is involved in a person's inheritance. The concept of privity of blood was at one time a very important part of the law of descent.
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