How to differentiate privity of estate and privity of contract

Privity of estate and privity of contract can be differentiated as follows:

Privity of Estate

• Definition: It refers to the relationship that exists between parties who have a mutual interest in the same property.
• Parties Involved: It can involve third parties whose names are not in the contract but have an interest in the property.
• Example: A buyer who purchases a property with an existing tenancy. The law binds the new landlord and tenant via privity of estate.

Privity of Contract

• Definition: It refers to the relationship between the parties who have entered into a contract.
• Parties Involved: Only the parties who are directly involved in the contract can sue and be sued on the contract.
• Example: Only the original landlord and tenant can use the contract to sue each other.

These distinctions help in understanding the legal obligations and rights of parties involved in property transactions.