Legal Definitions - Vertical privity

Definition: Vertical privity is a legal term that refers to the relationship between companies in a distribution chain, such as a manufacturer and a distributor. Those in vertical privity are jointly liable for product defects in the vertical chain. In real property law, vertical privity is required for the enforcement of a real covenant, which is a written promise related to the land.

For example, if a manufacturer sells a defective product to a distributor, and the distributor sells the same product to a retailer, and the retailer sells it to a consumer, all parties in the vertical chain are responsible for the defect. This means that the manufacturer, distributor, retailer, and even the consumer can be held liable for any harm caused by the defective product.

In real property law, vertical privity is the relationship between the original party of conveyance, such as a grantor or grantee, and a subsequent party who acquires the real property, such as a purchaser. The subsequent party is bound by any real covenant related to the property if they have sufficient notice of it at the time of purchase.

Vertical privity is important in both business law and real property law because it establishes a legal relationship between parties that can be held responsible for certain actions or promises. In the case of a defective product, all parties in the vertical chain are responsible for ensuring that the product is safe and free from defects. In the case of a real covenant, vertical privity ensures that subsequent parties who acquire the property are aware of any promises or limitations related to the land.