1. A contract creates a special legal relationship for the parties who enter upon it. It follows logically that only such people as are 'privy' (parties) to it can normally be affected by it ('res inter alios acta aliis neque nocere neque predesse potest' - 'An agreement can only bind the parties; it can neither impose obligations upon other people, nor confer rights upon them'.).
This rule is subject to exceptions.

2. A contract cannot impose obligations upon people who are not privy to it.
a) Leading case: Scruttons v. Midland Silicons Ltd. 1962 - liability in relation to a third party.
b) Exceptions:
aa) Resale Prices Act 1976 - in the case of 'exempted goods' a supplier may enforce a minimum price condition against any person who is not a party to the sale and who subsequently acquires the goods with notice of that condition; provided that the goods are acquired in the course of business.
bb) Sale of land under lease - the purchaser is bound by the lease (enduring interest).

3. A contract cannot confer rights upon people who are not privy to it.
a) Leading case: Tweedle v. Atkinson 1861 - money promised to marrying son.
b) Exceptions:
aa) Where one party enter into the contract as trustee for a third party, the third party acquires an equitable right in the subject matter of the contract.
Compare: Binions v. Evans 1972 - contractual license (no enduring interest) / constructive (!) trust.
bb) A principal may acquire the benefit of a contract made by his agent (this is doubtful, because the agent is acting
on behalf of the principal - thus the principal is privy to it).
cc) Statutory exceptions: Road Traffic Act 1988 - insurers are liable to people other than the assured (this can also be explained by the technique of assignment by law). Also: Third Parties (Rights against Insurers) Act 1930.
dd) Collateral warranty doctrine as in Shanklin Pier Ltd. v. Detel Products Ltd. 1951
c) Enforcing a contract confering rights upon third parties: A can sue B in respect of loss arising to C:
Jackson v. Horizon Holidays Ltd. 1975
Moreover, where the equitable remedy of specific performance is available A may obtain it in favour of C:
Beswick v. Beswick 1968 - annuity promised to widow.