Steel, Inc., and Transport Company enter into a contract. UniOil Corporation, which will indirectly benefit from the deal, is prevented from having rights under the contract by the principle of

Question

Steel, Inc., and Transport Company enter into a contract. UniOil Corporation, which will indirectly benefit from the deal, is prevented from having rights under the contract by the principle of​

Quizplus · Accepted Answer

The principle that prevents UniOil Corporation from having rights under the contract is privity. Privity of contract means only the parties who have entered into the contract are bound by its terms and have rights under it. UniOil Corporation is just an indirect beneficiary and not a party to the contract between Steel, Inc., and Transport Company. As a result, they have no right to sue for breach of contract or enforce any terms of the contract.