Third Party Rights Flashcards

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1
Q
  1. When is a third party given the right to enforce a term of the contract?
A

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2
Q
  1. What rights are given to a third party?
A

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3
Q
  1. What defences are available to the promisee in an action brought by the third party?
A

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4
Q
  1. To what extent can the parties to the contract vary or rescind the contract?
A

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5
Q
  1. How can the parties to a contract exclude the rights of a third party?
A

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6
Q

Activity 11.4
What is the relationship between the 1999 Act and the common law with regard to
the provision of exceptions to privity?

A
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7
Q

Activity 11.5
Is it likely that courts will accept a ‘performance interest’ on the part of a promisee
and allow the promisee to recover substantial damages for a breach which deprives
the third party of his intended benefit?

A
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8
Q

Activity 11.8
A contracts with B for B to carry goods between Dover and Calais by sea. Included
in this contract is a clause that exempts B and B’s agents, employees and
subcontractors from liability for any damage, howsoever caused. B contracts with
C for C to unload the ship. The ship carries several cargoes besides A’s goods. In
unloading goods belonging to Z, C accidentally destroys A’s goods. What advice do
you give to C as to his liability to A for the damage?

A
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9
Q

a. Would the widow in Re Schebsman have been better off if there had been a trust?

A
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10
Q

b. In what way, if at all, does the decision in
Beswick v Beswick form an exception to privity?

A
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11
Q

c. How would the Contracts (Rights of Third Parties) Act 1999 affect the decision in Beswick v Beswick?

A
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12
Q

d. How would the Contracts (Rights of Third Parties) Act 1999 affect the decision in
New Zealand Shipping v AM Satterthwaite?

A
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13
Q

e. Following the enactment of the 1999 Act, is it likely that courts will continue to
devise exceptions to the doctrine of privity?

A
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14
Q
  1. What are the two aspects of the doctrine of privity?
A
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15
Q
  1. Name three devices used in common law to give enforceable benefits to third parties.
A
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16
Q
  1. What is the main test of whether third parties should be given rights under contract?
A
17
Q
  1. In relation to the doctrine of privity, what is a ‘performance interest’?
A
18
Q
  1. Outline the Eurymedon case and when the device created in this decision can be utilised by contracting parties.
A
19
Q
  1. Can a contract impose a liability on a third party?
A
20
Q

Question 1
In which of the following circumstances would the third party’s claim be successful
and not prevented because of privity of contract at common law?
Choose one answer.

a. A tyre seller sells tyres to a distributor on the basis that they would not be resold below the seller’s list price and if the distributor sold the tyres to a trade
buyer the distributor would ensure that the trade buyer would also have a price
restriction clause imposed on them. The trade buyers then sell the tyres below
the seller’s list price. The seller tries to recover damages in light of the trade
buyers selling the tyres below list price.

b. A sells his coal business to B and A agrees that upon A’s death B will be able
to receive further financial assistance from C, A’s spouse. A dies. B sues C for
financial support.

c. A vendor agrees to sell land to a contractor for a specified sum and also an
additional sum to a third party. A dispute arises between the purchasers and the
vendors who brought an action for breach claiming not only the specified sum
but also the additional sum owed to the third party.

d. A purchaser contracts with a builder for the construction of a large building and
office development. Before the building was completed the purchaser assigned
his interest to another third party. The purchaser sued the builder, after
assignment, for defective work.

e. Don’t know.

A

Question 1The correct answer is d.a. is incorrect because these facts are similar to those in Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd (1915), and in that case Dunlop, the tyre sellers, were unable to successfully sue the trade buyers, Selfridges, because Dunlop’s contract was with the distributor not with Selfridges. There was no consideration between Dunlop and Selfridges and so there was no contract.b. is incorrect because as in Beswick v Beswick (1968) there was an attempt to enforce a benefit to the widow. In this scenario it is slightly different because rather than conferring a benefit (which may now be possible under the Contract (Rights of Third Parties) Act 1999) this contract attempts to confer a burden. This would fail, and quite rightly so, under the doctrine of privity.c. is incorrect because as in Woodar Investment Development Ltd v Wimpey Construction (UK) Ltd (1980) the vendors could not claim in respect of the sum

owed to the third party because there was privity between the vendor and the builder and the third party is not party to that contract.d. is correct because these facts are similar to those in Linden Gardens Trust Ltdv Lenesta Sludge Disposals Ltd (1994) and in this case the courts held that, as in cases concerning carriage of goods, the builder always knew that the purchaser was not going to occupy the premises for themselves and so it was perfectly foreseeable that any breaches by the builder would impact upon the third party. Even though this took place after assignment this did not defeat that claim.

21
Q

Question 2
Which of the following methods has NOT been successfully used as a ‘device’ to
circumvent the rule of privity of contract?
Choose one answer.

a. Agency.
b. Collateral contracts.
c. Legislation.
d. The Trust.
e. Don’t know.

A
22
Q

Question 3
Which of the following elements need not be present in order to form a Himalaya
clause applying the decision in The Eurymedon? In the statements set out below,
assume A is the owner of goods who contracts with B, a carrier, to carry the goods
by sea. C is a firm of stevedores who is not party to this contract but who contracts
separately with B to unload A’s goods.
Choose one answer.
a. A must include in the contract a clause which exempts the liability of not
only the other party to the contract with B but also servants, agents and subcontractors of B such as C, the stevedores who unload A’s goods.
b. The clause exempting the liability of B’s servants, agents and sub-contractors
must be contained in a deed in writing.
c. B must be authorised to act as C’s agent to receive the offer contained within A’s
exemption clause or to receive later ratification by C to so act.
d. C must provide consideration to A in order to support the exemption offer made
to C through the agency of B.
e. Don’t know.

A

.

23
Q

Question 4
Which answer best summarises why the Contracts (Rights of Third Parties) Act 1999
was enacted?
Choose one answer.
a. The Contract (Rights of Third Parties) Act was enacted because the Law
Commission mandated that Parliament should enact the legislation.
b. The Contract (Rights of Third Parties) Act was enacted because European
Union law required that English contract law be harmonised with that of other
member states of the European Union, all of which recognised a binding third
party right in contract.
c. The Contract (Rights of Third Parties) Act was enacted because it was thought
the best way to facilitate the intention of the contracting parties.
d. The Contract (Rights of Third Parties) Act was enacted because it was a suitable
birthday gift for Lord Denning.
e. Don’t know.

A
24
Q

Question 5
The Contracts (Rights of Third Parties) Act 1999 does not allow which of the
following actions?
Choose one answer.
a. To bind a third party, C, to the obligations created in a contract between A and B.
b. A and B, having created by contract a right in favour of C, a third party, can vary
their contract to remove the right given to C.
c. To allow C to enforce a benefit in a contract between two other parties or to
avail herself of a limitation clause in a contract between two other parties.
d. To allow a third party, C, to enforce a term of a contract between two other
parties where he is not named.
e. Don’t know.

A
25
Q
A