Privity is the legal term for a close, mutual, or successive relationship to the same right of property or the power to enforce a promise or warranty. It is an important concept in contract law.
The principle of privity in the common law's law of contract dictates that an individual cannot sue on a contract to which one was not a party. A common example of the principle in operation is that if A (a consumer) buys goods from B (a retailer) and B had originally bought them from C (the manufacturer). If the goods turn out to be faulty, A cannot sue C in contract law because A has no contract with C. B would have to sue C for the faulty goods to establish immunity from A's lawsuit against B.
US federal law
In the US federal law of res judicata, privity is said to preclude a party to a legal action from raising an issue that either was raised or could have been raised in previous legal action. Under federal law, "concepts summarized by the term privity are looked to as a means of determining whether the interests of the party against whom claim preclusion is asserted were represented in prior litigation." Therefore, privity in federal common law is "a convenient means of expressing conclusions that are supported by independent analysis." Because privity is actually a term to summarize a conclusion that one party was precluded, it "may exist for the purpose of determining one legal question but not another depending on the circumstances and legal doctrines at issue."