What is the definition of privity of contract?

The principle of privity of contract refers to the doctrine that restricts the rights and obligations arising from a contract to the original parties involved in the agreement. This means that only those who have entered into the contract can enforce its terms or be held liable for breaches. In essence, it establishes that a third party, who did not participate in the contract formation, typically has no legal standing to make claims or seek enforcement of the contract.

The nature of contracts is inherently relational; the parties have specifically agreed to certain terms and conditions, and the legal consequences of these agreements primarily affect only those directly involved. This doctrine is foundational in contract law, ensuring that contracts are honored and that parties are protected from obligations they did not consent to.

While some legal frameworks have evolved to provide certain rights to third parties under specific circumstances (such as reform acts or notable exceptions), the fundamental definition of privity of contract remains focused on the insulation of contract rights and duties to the parties who are signatories to the agreement.