Each week we select a legal term or phrase that’s commonly misunderstood, interesting, or that gives a fancy name to a simple idea. This week’s word is the latter.

Written by: Kirk Strohman

How many times have you attended a sporting event and heard the fans launch verbal assaults on the referee for errant calls? If the referee is so bad, why not just sue him for “referee malpractice”? If the referee has a contract with the league that requires him to exhibit professional competence does he breach that contract by making a really bad call? What if you owned an apparel store and this terrible ref made a call that cost your team the game and thereby cost you big sales – could you sue him then?

Courts say no. The legal concept of privity blocks these types of suits. In certain situations your privity is the difference between having a right to sue and finding yourself without legal recourse. Privity is simply a relationship or a mutual interest between parties. If the relationship is significant enough then the parties are in privity and may sue on behalf of or against the other person. In contract law, privity to the contract is a requirement whereby a claim fails where privity is lacking (though there are exceptions for third-party beneficiaries). In the referee story, the store owner does not have privity with either the referee or the league and so has no right to sue on the contract between those parties.

In tort law courts relaxed the privity requirement as it relates to products liability throughout the 20th century. When you buy a pot pie from the grocery store you are in privity with the grocery, but not the maker of the pot pie. But what if the pot pie is spoiled and you get sick? Today courts will allow you to sue the manufacturer of the pot pie even though privity is lacking. One rationale is that society should expect the pot pie-maker to anticipate anyone that eats a spoiled pot pie could get sick. Hopefully the manufacturer will never produce a spoiled pot pie and avoid being sued. Looking back to the referee example, society does not expect the referee to consider the endless possibilities that could result each time he makes a call. We just want him to make the best call possible during the game. Therefore we do not allow just anyone to sue for breach of a contract to which they are not a party.

Privity is relevant in other areas of law. Privity might bar you from suing under the theory of res judicata if you are in privity to a party that has already made a similar claim. In property law a covenant cannot be enforced with horizontal and vertical privity. While it may seem a confusing or antiquated concept, privity exists to protect us and prevent others from using the law with an unfair advantage.