D. Conclusion

• Author: John D. McCamus
• Profession: Professor of Law. Osgoode Hall Law School, York University
• Pages: 319-321

Page 319

A number of considerations suggest that the doctrine of privity is vulnerable to further reform. The rule lacks a convincing policy foundation. It is capable of producing unjust and surprising results in commonplace fact situations. Its unsatisfactory nature has produced a long and growing list of exceptions, thus rendering application of the doctrine unpredictable. Though it is easy to conclude that privity doctrine is ripe for further modification, it is perhaps more difficult to identify the optimal model of reform. One possibility would be for legislatures or the courts to overrule the doctrine by adopting the principle that the absence of privity, per se, will not preclude an action by a third-party beneficiary to enforce a promise. The law would thus be allowed to develop on a case-by-case basis.¹⁰⁰To fashion a rule that would indicate more precisely in what circumstances a third-party beneficiary should be allowed to enforce would be more difficult. As London Drugs strongly suggests, a rule allowing relief only to third-party beneficiaries expressly identified in the contract would be too narrow. In some circumstances it is evidently implicit in the contractual arrangements that a third party is an intended beneficiary.¹⁰¹How-ever, a rule granting standing to enforce to every possible beneficiary of contractual performance would obviously be too broad. A contract

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to build a factory may benefit a large number of individuals and groups within a community but it would not be seriously suggested that all of them should have a right of action against a defaulting contractor. Perhaps it would be difficult to improve on the rule set out in the Restatement on Contracts, which distils the American experience with granting such relief and provides that the third-party beneficiary will be able to enforce the promise "if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties."¹⁰²

Clearly, recognition would be inappropriate if, on a proper construction of the agreement, the promisor and promisee have agreed otherwise. The U.K. legislation¹⁰³and American experience¹⁰⁴suggests that careful thought must also be given to the question of the revocability of the promise and the extent to which supervening considerations such as frustration, illegality or non-performance by the promisee should constitute defences to the third-party beneficiary’s claim. Neither the U.K...