Contracts (Rights of Third Parties) Act 1999

Summary

This Act creates a statutory exception to the doctrine of privity of contract. It allows a person who is not a party to a contract to enforce a term of that contract if the contract expressly provides that they may, or if the term purports to confer a benefit on them (unless on a proper construction the parties did not intend the term to be enforceable by the third party). It represents the most significant reform of the privity rule since Tweddle v Atkinson (1861).

Key Points

• Third party may enforce a contractual term if the contract expressly provides for it or if the term purports to confer a benefit on them (s.1)
• The third party must be expressly identified in the contract by name, as a member of a class, or by description (s.1(3))
• The promisor may raise any defence or set-off that would have been available against the promisee (s.3)
• The contracting parties may not rescind or vary the contract to extinguish the third party's rights without their consent in certain circumstances (s.2)
• The Act does not affect any right or remedy of a third party that exists apart from the Act (s.7(1))
• Does not apply to contracts of employment, contracts of carriage, or certain company law documents (s.6)

Parts & Sections

Amendments History