Privity is the legal term for a close, mutual, or successive relationship to the same right of property or the power to enforce a promise or warranty. It is an important concept in contract law.
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The principle of privity in the common law's law of contract dictates that an individual cannot sue on a contract to which he or she was not a party. A common example of the principle in operation is that if A (a consumer) buys goods from B (a retailer) which B had originally bought from C (the manufacturer) which turn out to be faulty, A cannot sue C in contract law because A has no contract with C.
In the U.S. federal law of res judicata, privity is said to preclude a party to a legal action from raising an issue that either was raised or could have been raised in previous legal action.[1] Under federal law, "concepts summarized by the term privity are looked to as a means of determining whether the interests of the party against whom claim preclusion is asserted were represented in prior litigation."[2] Therefore, privity in federal common law is "a convenient means of expressing conclusions that are supported by independent analysis."[3] Because privity is actually a term to summarize a conclusion that one party was precluded, it "may exist for the purpose of determining one legal question but not another depending on the circumstances and legal doctrines at issue."[4]