Privity

To construction people the work “privity” might suggest a San-o-let for jobsite visiting dignitaries. However, the word has a much different legal meaning.

Years ago the law provided that privity had to exist between the person seeking recovery for negligence and the party against whom that recovery was sought. In this sense privity meant a legal relationship such as buyer-seller, landlord-tenant, contractor-owner, architect-owner or some similar relationship.

However, since the early part of this century that rule has been substantially eroded. Now there generally need not be a direct relationship between the party seeking recovery for negligence and the party sought to be held liable. One condition must, however, exist: the party claiming injury must be someone who foreseeably may have sustained injuries as a consequence of the negligence of the party against whom a negligence claim is made.

In the construction industry the privity rule is particularly meaningful. Thus, an owner now need not have a direct relationship with subcontractors, design consultants and others. If their negligence somehow harms him, he would have a direct claim against them.

Similarly, the owner would have a claim against the manufacturer of defective equipment used in the construction, even if he was not its original purchaser.

The change in the privity rule results from the philosophy that someone who is negligent should be responsible for his conduct if that negligence injures or causes damages to someone-regardless of whether there is a direct relationship between them.

This law should foster greater caution. If privity was still necessary it would be possible for a manufacturer to escape legal liability for its negligence if it sold to a distributor who, in turn, sold to a retailer from whom the consumer purchased the particular article. The abolition of the privity rule takes away the insulation which the manufacturer would have had under the old rule.

Construction people should therefore be on the alert that their negligence may result in claims against them by strangers. They should protect themselves accordingly. The first area of protection is care, the second may be insurance.