Contract Notes - Privity

7442 Words May 17th, 2013 30 Pages
Coulls v Bagot’s executor & Trustee Co ltd (1967) 119 CLR 460
By an agreement in writing, prepared without professional assistance, and headed “Agreement between C. and the O. Company”, C. granted to the company, in consideration of the sum of £5, the sole right for a specified period to quarry and remove stone from land owned by him and the company agreed to pay royalties at rates specified in the agreement. The agreement also contained provision for its extension and an authority by C. to the company to pay all moneys connected with the agreement to his wife and himself as joint tenants. The agreement was signed by C., by a person on behalf of the company and by the wife.
Held, that the part of the document authorizing payment to C.
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Trident General Insurance Co ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
Blue Circle Cement entered into a contract of insurance with Trident. The insurance policy covered liability for accidents occurring during this construction and defined the ‘assured’ parties as including all Blue Circle’s contractors and sub-contractors (which included McNiece). McNiece subsequently became the principal contractor for work being carried out at the Blue Circle plant. A worker was seriously injured and recovered a judgment against McNiece who sought indemnity under the policy from Trident. Trident denied liability on the ground that McNiece was not a party to the insurance contract.

McNiece succeeded at first instance in the SC of NSW. On appeal to the Court of Appeal the court found there was no privity of contract and McNiece had not provided consideration to Trident. Nevertheless they found for McNiece on the ground that under insurance policies beneficiaries can sue on the policy despite no privity or consideration. Trident appealed to the High Court.
Held: At least in relation to insurance policies, and almost certainly in relation to contract of indemnity generally, where the evidence is that third parties were in the contemplation of the principal, then those third parties can enforce the contract. That was the case here - Trident was

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