Vertical Privity

Definition - What does Vertical Privity mean?

Vertical privity refers to the relationship between multiple companies on a supply chain. In the context of the law, all companies who are in vertical privity, or who are on the supply chain, can be held liable in product liability cases. Such cases typically arise when a person is injured or suffers a financial loss due to a bad product.

Justipedia explains Vertical Privity

The term "vertical privity" is also relevant in property law. When it is used in a property law context, vertical privity refers to the relationship between a person who acquires a property with a restrictive covenant, and the original owner who had the restrictive covenant.

An example of a situation where vertical privity could be relevant in commercial law is if a computer exploded in someone's house. In this situation, all of the companies in vertical privity for the computer could be held liable.

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