What is meant by "privity" in contract law?

"Privity" in contract law refers specifically to the legal relationship between the parties involved in a contract. This concept establishes that only those who are part of the contract (the contracting parties) have the ability to enforce the terms of that contract or claim rights against each other. In essence, privity ensures that contract obligations and rights are confined to the individuals who are parties to the agreement.

For example, if two parties enter into a contract, only those two parties have the standing to sue each other for breach or to enforce the contract's terms. This principle underscores the protection of parties in the contractual relationship and limits the scope of accountability to those directly involved in the agreement.

Understanding privity is crucial for recognizing how contract law is structured and how rights are allocated between involved parties, which is central to the enforcement and interpretation of contracts. Other options, while they relate to aspects of contract law, do not define privity itself. The right to assign contracts, rights of third-party beneficiaries, and exceptions to enforceability pertain to specific scenarios within contract law rather than the fundamental concept of privity.