Identifying third parties who can enforce contract terms


The Court set out its approach to identifying third parties who can enforce contract terms where they are not named in the contract. Before the Contracts (Rights of Third Parties) Act 1999 (“1999 Act”), only the parties to a contract could enforce its terms (the so-called ‘privity of contract’ rule). The 1999 Act changed all that although it is relatively rare for cases to look at how the 1999 Act operates.


Section 1 of the 1999 Act provides that a ‘third party’ (ie someone who is not a party to a contract) can enforce a term of the contract if the contract expressly provides that it may or the term seems to grant it a benefit. The third party must be expressly identified in the contract by name, as a member of a class or be within a particular description.



Points to note:

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