Exemption Clauses and Third Parties in English and Israeli Law

תקציר

An exemption clause which purports to affect the rights and liabilities of a stranger to the contract raises the question of the connection between privity and exemption clauses. It is usual to regard the denial of validity to an exemption clause referring to the liability of a stranger as deriving from privity. Let us therefore commence by clarifying the meaning of privity and its relationship to exemption clauses and then go on to explain our view that such clauses should operate in favour or against a stranger in accordance with general principles of the positive contract law. Since privity has two aspects - denying a contract the capacity neither to benefit nor to harm a stranger - our treatment of the influence of privity upon exemption clauses will likewise deal with exempting a stranger and fettering him. After describing the situation in English law, we will turn to Israeli law which is no longer identical with English law, regarding the relationship between privity and exemption clauses.