The principle dictates that only parties to a contract should have enforceable rights under it. This concept establishes a direct relationship between the contracting parties, meaning that only those involved in the agreement can sue or be sued upon it. For example, if individual A contracts with individual B to provide a service to individual C, individual C, not being a party to the contract, generally cannot enforce the agreement against individual A or individual B, even if individual C is the intended beneficiary of the service.
The importance of this principle lies in its preservation of the negotiated agreement between the parties. It ensures that the obligations and rights arising from the contract remain confined to those who voluntarily consented to its terms. Historically, this doctrine developed to prevent third parties from interfering with or disrupting contractual relationships. The benefits include predictability in contractual dealings and the protection of parties from unforeseen liabilities to individuals or entities not initially contemplated in the agreement.
