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I accept William Swadling's point that a mistake - that a third party cannot be bound by a contract to which it was not privy - is clearly a mistake of law. However, postponement letters are two a penny these days in corporate re-financings and are clearly intended to bind, for example, inter-group subsidiaries (OOL) who are also creditors of one company (Parc) in the group. Without boring anyone with the details, in effect, the objective of such arrangements is to contract-out of the pari passu rules under IA 1986 . Privity, as far as I am aware, has never been raised as an issue in litigation over the validity and effects of priority/subordination agreements (which normally utilise the trust form to avoid the pari passu rules and being caught as a charge for CA 1985 registration purposes). The point in Banque Financiere was not whether a third party cannot be bound by a contract to which it is not privy (it seems to be implicitly accepted in the case that postponement letters do bind) but whether an agent, H, had authority to bind OOL. This supports the mistake being one of fact. William Swadling's reply raises the issue of whether or not parties can contract-out of the privity doctrine and I certainly don't want to get involved in that debate.