Contracts (Rights of Third Parties) Act 1999

Question 1

When can a third party enforce a term in a contract they are not party to?

Answer 1

When the contract states that the third party can do so

Question 2

What 2 things must be established for a third party to enforce a term?

Answer 2

1) agreement purports to confer a benefit on the party

2) it was not the case that the contracting parties ‘did not intend the term to be enforceable by the third party’

Question 3

Must the third party be identified?

Answer 3

No

Question 4

How easy is it to rebut the presumption of the third party having a right, once established?

Answer 4

Not very easy….

Question 5

What will parties need to include to remove all doubt?

Answer 5

‘exclusion of third party rights’ clause inserted

Question 6

Where 3rd party has a right to a term, when can the parties NOT rescind contract/ vary it to extinguish/ alter 3rd party’s entitlement under that right, without his consent? If….

Answer 6

a) third party communicated his assent to the term to the promisor,

b) promisor is aware that third party relied on term, or

c) promisor can reasonably be expected to have foreseen third party would rely on term + has in fact relied on it.

Question 7

What are the 3 circumstances in which the court can dispense the third party’s consent?

Answer 7

1) their whereabouts cannot reasonably be ascertained

2) mentally incapable of giving their consent

3) their reliance on the term cannot be reasonably ascertained

Question 8

Can a third party be placed in a better position than if the third party had been a party to the contract themself?

Answer 8

NO

Question 9

Are remedies available to third party same as parties to the contract?

Answer 9

Yes