On The Exception Of Privity Of Contract In Construction Contract

The contract is the agreement on a particular matter between the parties, which specifies the rights and obligations that people owe to others as a result of the relations and transactions in which they become involved. Privity of Contract is the significant difference between Contract System and other Civil Law System. But with the development of frequent commodity transaction, stricter requirements are set forth in social life. Compared to the trading in previous isolated economic condition, the current commodity transaction obtains continuity and correlation and becomes the new economic foundation of Contract Law therefore continue to strictly abide by the principle of Privity of Contract can neither meet the requirements of the society nor balance the interests of each party in the transaction, thus exceptions to the Privity of Contract have been emerging in all trading fields.The first section of this article introduces the general principles of Privity of Contract, analyzed the meaning of the principle and its theoretical basis in detail,The author holds the opinion that the Privity of Contract is rooted in the traditional economic base ,and is caused by the principle of equality, freedom of contract and the autonomy of decision. Exceptions to the principle of privity are gradually unavoidable as the result of the development of society, therefore this paper aims to analyze the value of these exceptions, and elaborate the legitimacy of its formation.The second section illustrates the privity of the construction contracts, as a special known contract, the Privity of Contract is generally applicable to construction contracts. However, exceptions to Privity of Contract still exist due to more main parts involved in the construction contract, the overlapped rights and obligations of each party, and multiple contradictions and disputes result there from. The foregoing exceptions are mainly in the claims of contract price and the responsibilities of the construction quality, etc.The third section illustrates the exceptions of principle of privity in the construction contract. Contractor shall claim for contract price against the Owner in case the Owner fail to pay the contract price or part of it timely in conformity to the Contract, and the subcontractor shall claim against its corresponding Contractor for exercising the right of subrogation in case the Contractor fail to fulfill its own obligations, and claim against the Owner for relevant contract price of part of it likewise. But how to protect the actual constructor? Construction interpretation stipulates that the actual constructor may sue the Owner directly, this right is the innovation of relative of the principle, resulting in gradually increase of cases that actual constructor claims rights against Owner, The related problems in trials question the application of the mentioned stipulation in practice. This article analyzes that it is the right of subrogation that gives rise to the power by which actual constructor can sue against the Owner. It analyzes the status of litigation of the parties involved in the claim, the rights of subrogation actual constructor may have, and then actual constructor should ensure the project quality. On the issue of the construction quality and the responsibility, the subcontractor and the contractor bear joint and several liabilities in case of the breach of contract, but the actual constructor is liable for tort liability.Finally, there are proposals of the principle of privity in the construction contract in practice. The nature of the right of the subrogation of the actual constructers as well as the substantive conditions of the subrogation should be clearly stipulated, besides, more opinions of the construction personnel on relative disputes should be put forward in trials.