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Q&A

What semantic notions underlie 'privity' with 'privity of contract'?

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The OED 3 ed, June 2007 defines

b. privity of contract n. the limitation of a contractual relationship to the two parties making the contract, which prevents any action at law by an interested third party such as a beneficiary.

but doesn't expound why "privity" fits, or was adopted for, this meaning in contract law. I quote two more definitions at the bottom.

I read Prof. Vernon Valentine Palmer LLM Yale, DPhil Oxon, The paths to privity : the history of third party beneficiary contracts at English law, but it doesn't explicitly answer my question.

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      We must begin with the fact that early law was virtually silent as to the definition of privity and that the etymology of the term is very distant from our present usage. In some legal texts, such as Rastell's Termes de La Ley (1624) and Edmund Wingate's Maximes of Reason (1658), privity was given much attention and several kinds of privity were listed, together with numerous examples, but the authors ventured no definitions and conveyed little hint of its function in the law." These writers had to proceed cautiously because privity connoted a series of ideas: privacy, secrecy, knowledge, interest, and relationship.21

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      Dr. Johnson's first dictionary (1755)2 stated that the word originally came from the old French term privauté meaning privacy, but this dictionary also noted that the contemporary 18th century meaning was "joint knowledge" and "great familiarity." In Kelham's Dictionary of the Norman or Old French Language (1779), the French term "privities" is rendered in English as and the notion of secrecy lingers in another definition current in the 18th century: "Private knowledge, as a woman is said to do a thing without her husband's privity."24 The noun privy derived from the French privé and originally signified a friend or acquaintance (as opposed to a stranger). When used as an adjective or an adverb, privy came to be identified with intimate knowledge and familiarity, as in the expression "he is privy to the affair."2S The transition from the concept of privacy (privauté) to that of knowledge and familiarity is perhaps understandable. In the privacy of the family, for example, persons were permitted to know one another's affairs, and in the privacy of correspondence% and meetings, personal knowledge was shared, though not with the world at large. But privity acquired more abstract legal connotations such as "interest" and "relationship," an evolution which seems more difficult to explain. The transition is shown in John Cowell's statement in 1607: "Privie commeth of the French (privie i. familiaris) and signifieth in our common lawe, him that is partaker, or hath an interest in any action, or thing."27 A modern legal dictionary similarly indicates that while privity originally meant "knowledge," it now denotes in a secondary sense "a peculiar relation in which a person stands either to a transaction or to some other

Page 8

person.

      This transition suggests that privity the fact became a source of obligations when legal meaning was attached to the personal bond or *inward relation" resulting from knowledge and familiarity? Contracts, for example, have a recurrent factual basis in the privacy of meetings, discussions, and personal dealings.30 The word covenant still indicates this original basis. Well before it came to signify a promise or an action at common law, covenant meant a convening, an assembly, or a "coming together," and those who were not there could not know nor perhaps accurately relate what had transpired.31 From the fact of close relationship would follow the concept of the closed circle. Outside the circle are strangers who can be neither benefitted nor burdened by the rights or duties concerned. The number of these circles is almost infinite, but duties and relationships are kept quite distinct. A's debt to his friend B places them together in the duty circle, but B would be a stranger toward A with respect to A's dealings with someone else. The size of the circle and the number of privies within it would vary, depending upon the scope of the duty and its real or personal nature." Furthermore, those originally outside the circle may be drawn into it when they acquire rights or assets with knowledge or notice of the existing state of affairs between parties."

Anson's Law of Contract (2016 30e) p 647.

At common law the general rule is that no one but the parties to a contract can be entitled under it, or bound by it. This principle is known as that of privity of contract.

McKendrick, Contract Law (2020 9e), p 929.

  1. The general rule at common law in England is that a third party cannot acquire rights under a contract to which he is not a party nor can he be subject to a burden by a contract to which he is not a party. These rules are known as the doctrine of privity of contract.
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