Definition - What does Privity mean?
Privity means a relationship that is direct or successive. Parties that have privity with one another have a shared interest or shared legal responsibilities. Privity can refer to parties in a legally binding commercial contract, parties who have ownership of a property, etc.
To have privity, parties must simply have some sort of strong bond or shared interest, typically one that is legally binding.
Justipedia explains Privity
Often, different companies on a supply chain have privity with one another; they can all be liable if a product malfunctions and causes an injury. So, for example, if a machine malfunctions and causes an injury, all of the companies in privity on the supply chain may be sued (they may all be held equally responsible for the malfunction). The responsibility may be distributed unequally among them, but this varies from case to case.
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