What does the term 'privity of contract' refer to?

The term 'privity of contract' specifically refers to the relationship that exists between the parties involved in a contract, which restricts their obligations and benefits to those parties exclusively. This principle highlights that only the individuals or entities that have entered into a contractual agreement are entitled to enforce it or are bound by its terms.

In practical terms, privity means that unless a third party is mentioned in the contract or the contract explicitly grants them rights or obligations, they have no legal standing to claim benefits or enforce any duties stemming from that contract. This concept is central to contract law, particularly in hospitality, where understanding the rights and responsibilities of contracting parties ensures clear expectations and reduces potential disputes.

The other options do not capture the essence of privity. While benefits assigned to a contract relates to aspects of contractual rights, and permissions to modify the contract concern amendments, they don't directly address the exclusivity of the relationship formed by the contract. The rights of third parties involve a different legal consideration known as “third-party rights,” which stands apart from the core principle of privity in contract law.