The legal concept of vertical privity is an important one that all businesses should understand when dealing with contracts. Put simply, vertical privity is the relationship between two parties who are not themselves directly involved in a contract but are affected by, and owe duties to one another because of it. <\/p>\n
It\u2019s a concept mainly related to indemnification and reliance duties, and comes into play when a defendant hires a third-party to perform a service for them, and an agreement is formed between the defendant and the third party. The third party then has both direct and indirect relationships with the defendant. This is called vertical privity.<\/p>\n
One example of vertical privity in use is in the case of Nationwide Insurance Company of America v. Foster. In this case, Nationwide\u2019s employee, Foster, hired a third-party to do work for him. The third-party did not fulfill his contractual obligation, and Nationwide sued the third-party for breach of contract. The court ruled that vertical privity existed between the employee, Foster, and the third-party because Nationwide and Foster were connected by the contract between the third-party and Foster. <\/p>\n
Vertical privity is an important concept to keep in mind when dealing with contracts and working with outside parties. Businesses should be aware of the legal implications of this concept so they can ensure their contracts are compliant with the law. Businesses also need to be aware of the liability they might face for the actions of a third party should they enter into a contract with them. Additionally, businesses need to be aware of the rights that they may possess against third-parties when they become parties to a contract.<\/p>\n","protected":false},"excerpt":{"rendered":"
The legal concept of vertical privity is an important one that all businesses should understand when dealing with contracts. Put simply, vertical privity is the relationship between two parties who are not themselves directly involved in a contract but are affected by, and owe duties to one another because of it. It\u2019s a concept mainly […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1796","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\n\t\t\n