Contracts (Rights of Third Parties) Act 1999

সারসংক্ষেপ

The Contracts (Rights of Third Parties) Act 1999 created a significant statutory exception to the long-established common law doctrine of privity of contract. Under the privity doctrine as affirmed in Dunlop Pneumatic Tyre Co v Selfridge & Co Ltd [1915] AC 847 and Tweddle v Atkinson (1861), only a party to a contract could enforce it, meaning that a third party who stood to benefit from a contractual promise had no right of action against the promisor. The 1999 Act, which implemented the Law Commission's recommendation in Report No 242 (Privity of Contract, 1996), confers on third parties a right of enforcement in two circumstances: (a) the contract expressly provides that the third party may enforce the term; or (b) the term purports to confer a benefit on the third party, unless on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party. The third party must be identified in the contract by name, as a member of a class, or by a particular description; they need not be in existence at the time the contract was made. The Act also protects third parties from having their crystallised rights extinguished by variation or rescission by the contracting parties (s.2), allows promisors to rely on defences and set-offs that would have been available against the promisee (s.3), and preserves all existing third party rights at common law and in equity (s.7). Certain categories of contract are excluded from the Act, notably bills of lading, company memoranda and articles, and employment contracts (insofar as they would give rights to employees to enforce contracts between employers).

মূল পয়েন্ট

• Right of enforcement (s.1(1)) — a person who is not a party to a contract may enforce a term of the contract in his own right if (a) the contract expressly provides that he may; or (b) subject to s.1(2), the term purports to confer a benefit on him
• Negative construction proviso (s.1(2)) — s.1(1)(b) does not apply if on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party; this is a rebuttable presumption that shifts the burden of proof to the contracting parties to show exclusion of the right
• Identification requirement (s.1(3)) — the third party must be expressly identified in the contract by name, as a member of a class, or as answering a particular description, but need not be in existence when the contract is entered into
• Remedies (s.1(5)) — the third party has available to him all remedies that would have been available to him in an action for breach of contract if he had been a party, including damages, injunction, and specific performance, subject to the rules relating to those remedies
• Protection against cancellation (s.2) — once the third party has communicated assent to the term to the promisor, or the promisor knows the third party has relied on the term, or the third party has relied on the term, the contracting parties may not rescind or vary the contract so as to extinguish or alter the third party's entitlement without the third party's consent
• Defences of promisor (s.3) — the promisor may rely on any defence or set-off arising from the contract that would have been available to the promisor in a claim by the promisee; the promisor may also rely on any defence or set-off that would have been available to the promisor against the third party in a claim arising otherwise than from the contract
• Exclusions (s.6) — the Act does not apply to contracts for the carriage of goods by sea (except as regards s.1(5) rights in bills of lading), employment contracts (so far as conferring rights on employees of persons other than the parties), and company constitutional documents; parties may also expressly exclude the Act
• Preservation of existing rights (s.7) — the Act does not affect any right or remedy of a third party that exists or is available apart from the Act; existing common law exceptions such as collateral contracts, agency, and statutory rights (e.g. Third Parties (Rights against Insurers) Act) continue to operate

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