LAW 447 Lecture Notes - London Drugs, Tort, The Seller

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Published on 20 Nov 2012
Lecture 7 September 20
Privity of Contract
- there are certain legislative regimes that abolish privity (Business Practices and Consumer
Protection Act; PPSA in certain contexts)
- The SGA doesn’t abolish privity
There are two types of privity; horizontal and vertical
- Horizontal privity, A + B have a contract, A not liable to C
- Vertical privity, A + B and B + C have a contract then A is not liable to C
Readings ch 3 + ch 4 (s.22 + 23)
- Contract was between the mother and seller, the main damage to the child cannot be claimed in
contract because the child was not a party to the contract
Vertical privity
Manufacturer k retailer k consumer
- The rights in personam at each level are different from each other
- Ie. if the manufacturer sells to the retailer the in personam right can be ‘merchantable quality’;
when you sell it further to someone else then the in personam right created is a newly created
right even though it looks quite similar. The in rem right that is passed on is not new the
ownership is not new, it is passed on from person to person
- However the consumer has acquired the rights of the retailer to sue the manufacturer could
acquire the rights, assignment of the in personam rights
o In Quebec this happens automatically
- There are two types of assignment, the common law assignment (now statute) and equitable
Privity in any event is a novel doctrine this was about the same time the rules on consideration were
confirmed (1840s).
- The common law can do some work (Fraser River) the SCC took steps to get around privity of
contract prof thinks this wasn’t a huge step, more like a baby step: this case was a LLC in the
insurance contract that basically benefits the tortfeasor; the tortfeasor was using the LLC to
protect itself can you use a term in someone else’s contract to defend yourself from a claim by
somebody who is actually a party to the contract
o Relying on its earlier decision in London Drugs the court says yes you are allowed to use
that defence even if you are not part of the contract it is a very limited change to privity
because it doesn’t let you use the LLC as a sword, just as a defence.
- Number of tricks that the court did in spite of reasonably clear language in the statute
- The court basically said there was no possible way that the consumer had consented to an
alteration of their rights
- An example of what the court can do to work around the privity problems
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