Privity of contract – this legal term is used in the sphere of Law of Contracts. It means to participate as a negotiating party in an agreement. The privity of contract entitles a participating party to initiate legal proceedings and sue the other party in case of eventual non-performance, but at the same time prevents any third parties to bring such proceedings. The privity in contract basically establishes the rights of the participating parties and secures their interests from any third parties (although there are some exceptions, depending of the concrete local legislation), stating that in the usual case a contract creates obligations only between the parties who have validly concluded it.