A key premise of contract law that establishes the rights and responsibilities of parties to a contract is the idea of privity of contract. It describes the legal connection that solely exists between the parties to the contract, i.e., none of the parties' third parties. Even though a contract may directly impact a third party, the theory of privity of contract limits that party's capacity to enforce or assert rights under the agreement. Privity of contract was tightly upheld in the past, prohibiting other parties from taking advantage of or enforcing contractual duties. To lessen the severity of the concept and provide for specific circumstances when third parties may have a genuine interest in the contract, exceptions and revisions have been put in place throughout time. The idea of "privity of estate," which enables a person who develops an interest in the contract's subject matter to enforce the contract, was introduced as an exception to privity of contract. Additionally, a number of laws and legal precepts have been implemented to provide rights and safeguards for specific third parties, including contracts for the benefit of third parties, rights transfers, and beneficiaries of trusts. There are several uses for the privity of contract notion. By enabling parties to choose the parameters of their contractual relationships without intervention by unaffiliated third parties, it supports the freedom of contract. By reducing the number of possible parties who may enforce a contract or be held accountable under it, it also offers some degree of clarity and predictability.
