Many modern legal systems have a much more flexible attitude to the issue of who ca enforce a contract. In practice the numerous exceptions to privity and The contracts Rights of Third Parties Act 1999 mean it causes fewer problems than might be expected, but many critics have argued rather than fudges the law with so many exceptions, it might be better to abolish the doctrine completely.
Arguments For keeping the Privity Rule:
Free will: based on the idea that only the parties to a contract should incur rights and responsibilities since only they have agreed to do so the free will theory that underlines the whole of contract law.
Lack of reciprocal rights: it can be argued that it would be unjust to allow a party to sue on a contract if that party could not be sued on it. Yet it appears to cause no great problems in the area of unilateral contracts (Carlil v Carbolic Smoke Ball Company – Mrs Carlil could be sued for not buying the product.)
The flood gates argument: it is sometimes suggested that abolishing the privity rule could expose promisors to indefinite liability making it impossible to foresee what they will owe, when and to whom.
The many exception to the doctrine make it tolerable in practice: for example, the doctrine does not forbid agency, third party rights against insurers, covenants relating to land, collateral contracts, the rights of third party beneficiaries etc.
Privity of Contract does not exclude third parties taking other courses of action: for example in the Tort of negligence i.e. White v Jones
Arguments Against the Privity Rule
The doctrine can prove inconvenient: in some cases the doctrine can lead to a chain of contract claims, because it prevents the party with the problem suing the party who actually caused it. (e.g. covenants, each previous owner would sue the next in line for the original owner to be satisfied) This would waste court time, which could otherwise be better used.
Justifiable reliance: it can be argued that a contract should protect those who, while not a party to it, incur loses because they reasonably rely on performance of it.