A contract is made by agreement. When, by agreement, a contract comes into existence, the result is the creation of legally enforceable obligations - each party becomes obligated to do what they promised. Normally the parties to a contract perform their obligations voluntarily, but sometimes they do not. In the event of a failure to perform, a legal action can be brought to enforce the contractual obligations owed.

It is important to remember that only the person to whom an obligation is owed is entitled to bring an action to enforce that obligation. And because contractual obligations are created by agreement, it follows that they exist only between the persons who participated in the creation of the contract - the persons we refer to as 'parties' to the contract. Everyone else is a stranger to the agreement, and does not acquire any legal rights to enforce it.

This is what is known as the doctrine of 'privity' of contract. It means that a contract is a private matter between the parties to the agreement, and that the resultant contractual obligations can only be enforced by those particular persons. The doctrine can have important consequences.