Vertical privity

Definition

1) In business law, the relationship between companies in a distribution chain. For example, a manufacturer and a distributor are in vertical privity. Those in vertical privity are jointly liable for product defects in the vertical chain.

2) The relationship between a party to a restrictive covenant and a person who later acquires the property burdened by the covenant from the party. The purchaser is bound by the covenant if he or she had sufficient notice of it at the time of purchase.

Illustrative caselaw

See, e.g. Berrier v. Simplicity Mfg., Inc., 563 F.3d 38 (3d Cir. 2009).

See also