Question

Apply the given legal principles to the facts provided in the following of the question and select the most appropriate answer.
Principle : The doctrine of privity mandates that only a party to a contract can claim upon it.
Facts : P started the business of manufacturing table lamps which he sold to a distributor (“Q”) who in turn sold the lamps to a store owner (“R”) in the city. P entered into an agreement with Q which mandated that Q can only sell the lamps to store owners at a minimum retail price of ₹50, failing which Q would have to pay P ₹5 for each lamp sold below ₹50. Q entered into an identical contract with R, mandating that R can only sell the lamps to customers for ₹50, failing which R would have to pay Q ₹5 for each lamp sold below ₹50. R sold a lamp to a customer for ₹40 and P seeks to claim against R.

• A. P will not be successful since there is no privity of contract between P and R
• B. P will not be successful since R is free to sell the product at the price of their choosing
• C. P will not be successful since Q has not been made a party to the proceedings
• D. P will not be successful since there is no privity of contract between P and Q

Answer 1

The Correct Option is A

The principle of privity of contract states that only parties involved in a contract can enforce it. Here's how it applies to the given facts:

• Parties Involved in the Contract:
  P has a contract with Q, but not with R.
• Contractual Terms:
  P's agreement with Q requires lamps to be sold for at least ₹50, with a penalty of ₹5 to P for violations. Similarly, Q has a contract with R with the same price condition and penalty. However, note that this second contract involves only Q and R, excluding P.
• Violation Occurrence:
  R sold a lamp for ₹40, violating the contract with Q. However, no direct contract exists between P and R.
• Application of the Privity Doctrine:
  P cannot claim against R because there's no contractual relationship (or privity) between them. R's obligations are only toward Q, who in turn is accountable to P.
• Conclusion:
  Thus, P is not successful in claiming against R due to the lack of privity of contract between P and R.

The most appropriate answer is: P will not be successful since there is no privity of contract between P and R.