What does privity of contract imply?

Privity of contract is a fundamental principle in contract law that establishes that only the parties involved in a contract have the legal right to enforce it or seek remedies for its breach. This means that if an agreement exists between two parties, only those two can bring a lawsuit or claim damages if one of them fails to perform their obligations under the contract.

This principle protects the freedom of contract, ensuring that the parties can define their own rights and obligations without interference from external individuals. It also simplifies legal enforcement, as only the parties directly involved can claim benefits or enforce terms.

The other options miss the mark: the idea that only third parties can enforce a contract contradicts the nature of privity, which safeguards the rights of the contracting parties. Stating that no one can enforce a contract would deny the legal recourse available to the parties involved. Similarly, the notion that anyone can sue under a contract disregards the specific legal relationship established by the contract — only those directly partaking in it can bring an action.