As a copy editor, it is important to have a clear understanding of legal terminologies and how they apply in various scenarios. One such term is privity of contract, which refers to the legal relationship between parties that have entered into a contract. Essentially, privity of contract means that only the parties that have agreed to the contract are bound by its terms and are entitled to its benefits. However, there are some exceptions to this rule, which we will explore in this article.

Third-party beneficiaries

One exception to privity of contract is the concept of third-party beneficiaries. This means that a contract can create rights and obligations for a third party who is not a party to the agreement. For example, if a couple hired a contractor to build a house, but they arranged for payment through a bank loan, the bank would be considered a third-party beneficiary. This would give the bank the right to enforce the terms of the contract in order to ensure that funds are properly disbursed.

Assignment of rights

Another exception to privity of contract is the concept of assignment of rights. This occurs when one party to a contract transfers their rights under the agreement to a third party. For example, if a company entered into a contract with a supplier to purchase goods, but later decided they no longer needed the goods, they might assign their rights to a third party. The third party would then be able to enforce the terms of the contract, even though they were not a party to the original agreement.


Novation is a third exception to the privity of contract rule. This occurs when the parties to a contract agree to substitute a new party for one of the original parties. For example, if a company was sold to a new owner, and the new owner wanted to continue a contract with a supplier, they would need to execute a novation agreement. The novation agreement would substitute the new owner as a party to the contract and release the original owner from their obligations.


These three exceptions to privity of contract are important for copy editors to understand, as they can impact the interpretation and application of contract terms. It is important to recognize that the general rule of privity of contract still applies in most cases, but these exceptions can provide alternatives that may be useful depending on the circumstances. By being familiar with these concepts, copy editors can better assist in the drafting and review of contracts.