![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
United Kingdom Legislation |
||
You are here: BAILII >> Databases >> United Kingdom Legislation >> Contracts (Rights of Third Parties) Act 1999 (c. 31) URL: http://www.bailii.org/uk/legis/num_act/1999/ukpga_19990031_en_1.html |
[New search]
[Context]
[Printable version]
[Help]
Click here to go to The UK Statute Law Database site for further updates and information concerning this Act.
An Act
to make provision for the enforcement of
contractual
terms by
third
parties.
[11th November 1999]
Be it enacted by the Queen´s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:–
(1)
Subject to the provisions of this Act,
a person who is not a
party
to a
contract
(a "
third
party")
may in his own
right
enforce a term of the
contract
if–
(a)
the contract
expressly provides that he may, or
(b) subject to subsection (2), the term purports to confer a benefit on him.
(2)
Subsection (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.
(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.
(4)
This section does not confer a right
on a
third
party
to enforce a term of a
contract
otherwise than subject to and in accordance with any other relevant terms of the
contract.
(5)
For the purpose of exercising his right
to enforce a term of the
contract,
there shall be available to the
third
party
any remedy that would have been available to him in an
action
for breach of
contract
if he had been a
party
to the
contract
(and the rules relating to damages, injunctions, specific performance and other relief shall apply accordingly).
(6)
Where a term of a contract
excludes or limits liability in relation to any matter references in this
Act
to the
third
party
enforcing the term shall be construed as references to his availing himself of the exclusion or limitation.
(7)
In this Act,
in relation to a term of a
contract
which is enforceable by a
third
party–
"the promisor" means the party
to the
contract
against whom the term is enforceable by the
third
party,
and
"the promisee" means the party
to the
contract
by whom the term is enforceable against the promisor.
(1)
Subject to the provisions of this section, where a third
party
has a
right
under section 1 to enforce a term of the
contract,
the
parties
to the
contract
may not, by agreement, rescind the
contract,
or vary it in such a way as to extinguish or alter his entitlement under that
right,
without his consent if–
(a)
the third
party
has communicated his assent to the term to the promisor,
(b)
the promisor is aware that the third
party
has relied on the term, or
(c)
the promisor can reasonably be expected to have foreseen that the third
party
would rely on the term and the
third
party
has in fact relied on it.
(2) The assent referred to in subsection (1)(a)–
(a) may be by words or conduct, and
(b) if sent to the promisor by post or other means, shall not be regarded as communicated to the promisor until received by him.
(3)
Subsection (1) is subject to any express term of the contract
under which–
(a)
the parties
to the
contract
may by agreement rescind or vary the
contract
without the consent of the
third
party,
or
(b)
the consent of the third
party
is required in circumstances specified in the
contract
instead of those set out in subsection (1)(a) to (c).
(4)
Where the consent of a third
party
is required under subsection (1) or (3), the court or arbitral tribunal may, on the application of the
parties
to the
contract,
dispense with his consent if satisfied–
(a) that his consent cannot be obtained because his whereabouts cannot reasonably be ascertained, or
(b) that he is mentally incapable of giving his consent.
(5)
The court or arbitral tribunal may, on the application of the parties
to a
contract,
dispense with any consent that may be required under subsection (1)(c) if satisfied that it cannot reasonably be ascertained whether or not the
third
party
has in fact relied on the term.
(6)
If the court or arbitral tribunal dispenses with a third
party´s
consent, it may impose such conditions as it thinks fit, including a condition requiring the payment of compensation to the
third
party.
(7) The jurisdiction conferred on the court by subsections (4) to (6) is exercisable by both the High Court and a county court.
(1)
Subsections (2) to (5) apply where, in reliance on section 1, proceedings for the enforcement of a term of a contract
are brought by a
third
party.
(2) The promisor shall have available to him by way of defence or set-off any matter that–
(a)
arises from or in connection with the contract
and is relevant to the term, and
(b) would have been available to him by way of defence or set-off if the proceedings had been brought by the promisee.
(3) The promisor shall also have available to him by way of defence or set-off any matter if–
(a)
an express term of the contract
provides for it to be available to him in proceedings brought by the
third
party,
and
(b) it would have been available to him by way of defence or set-off if the proceedings had been brought by the promisee.
(4) The promisor shall also have available to him–
(a) by way of defence or set-off any matter, and
(b)
by way of counterclaim any matter not arising from the contract,
that would have been available to him by way of defence or set-off or, as the case may be, by way of counterclaim against the third
party
if the
third
party
had been a
party
to the
contract.
(5)
Subsections (2) and (4) are subject to any express term of the contract
as to the matters that are not to be available to the promisor by way of defence, set-off or counterclaim.
(6)
Where in any proceedings brought against him a third
party
seeks in reliance on section 1 to enforce a term of a
contract
(including, in
particular,
a term purporting to exclude or limit liability), he may not do so if he could not have done so (whether by reason of any
particular
circumstances relating to him or otherwise) had he been a
party
to the
contract.
Section 1 does not affect any right
of the promisee to enforce any term of the
contract.
Where under section 1 a term of a contract
is enforceable by a
third
party,
and the promisee has recovered from the promisor a sum in respect of–
(a)
the third
party´s
loss in respect of the term, or
(b)
the expense to the promisee of making good to the third
party
the default of the promisor,
then, in any proceedings brought in reliance on that section by the third
party,
the court or arbitral tribunal shall reduce any award to the
third
party
to such extent as it thinks appropriate to take account of the sum recovered by the promisee.
(1)
Section 1 confers no rights
on a
third
party
in the case of a
contract
on a bill of exchange, promissory note or other negotiable instrument.
(2)
Section 1 confers no rights
on a
third
party
in the case of any
contract
binding on a company and its members under section 14 of the [1985 c. 6.] Companies
Act
1985.
(3)
Section 1 confers no right
on a
third
party
to enforce–
(a)
any term of a contract
of employment against an employee,
(b)
any term of a worker´s contract
against a worker (including a home worker), or
(c)
any term of a relevant contract
against an agency worker.
(4) In subsection (3)–
(a)
"contract
of employment", "employee", "worker´s
contract",
and "worker" have the meaning given by section 54 of the [1998 c. 39.] National Minimum Wage
Act
1998,
(b)
"home worker" has the meaning given by section 35(2) of that Act,
(c)
"agency worker" has the same meaning as in section 34(1) of that Act,
and
(d)
"relevant contract"
means a
contract
entered into, in a case where section 34 of that
Act
applies, by the agency worker as respects work falling within subsection (1)(a) of that section.
(5)
Section 1 confers no rights
on a
third
party
in the case of–
(a)
a contract
for the carriage of goods by sea, or
(b)
a contract
for the carriage of goods by rail or road, or for the carriage of cargo by air, which is subject to the rules of the appropriate international transport convention,
except that a third
party
may in reliance on that section avail himself of an exclusion or limitation of liability in such a
contract.
(6)
In subsection (5) "contract
for the carriage of goods by sea" means a
contract
of carriage–
(a) contained in or evidenced by a bill of lading, sea waybill or a corresponding electronic transaction, or
(b) under or for the purposes of which there is given an undertaking which is contained in a ship´s delivery order or a corresponding electronic transaction.
(7) For the purposes of subsection (6)–
(a)
"bill of lading", "sea waybill" and "ship´s delivery order" have the same meaning as in the [1992 c. 50.] Carriage of Goods by Sea Act
1992, and
(b)
a corresponding electronic transaction is a transaction within section 1(5) of that Act
which corresponds to the issue, indorsement, delivery or transfer of a bill of lading, sea waybill or ship´s delivery order.
(8) In subsection (5) "the appropriate international transport convention" means–
(a)
in relation to a contract
for the carriage of goods by rail, the Convention which has the force of law in the United Kingdom under section 1 of the [1983 c. 14.] International Transport Conventions
Act
1983,
(b)
in relation to a contract
for the carriage of goods by road, the Convention which has the force of law in the United Kingdom under section 1 of the [1965 c. 37.] Carriage of Goods by Road
Act
1965, and
(c)
in relation to a contract
for the carriage of cargo by air–
(i)
the Convention which has the force of law in the United Kingdom under section 1 of the [1961 c. 27.] Carriage by Air Act
1961, or
(ii)
the Convention which has the force of law under section 1 of the [1962 c. 43.] Carriage by Air (Supplementary Provisions) Act
1962, or
(iii)
either of the amended Conventions set out in Part B of Schedule 2 or 3 to the [S.I. 1967/480.] Carriage by Air Acts
(Application of Provisions) Order 1967.
(1)
Section 1 does not affect any right
or remedy of a
third
party
that exists or is available apart from this
Act.
(2)
Section 2(2) of the [1977 c. 50.] Unfair Contract
Terms
Act
1977 (restriction on exclusion etc. of liability for negligence) shall not apply where the negligence consists of the breach of an obligation arising from a term of a
contract
and the person seeking to enforce it is a
third
party
acting
in reliance on section 1.
(3)
In sections 5 and 8 of the [1980 c. 58.] Limitation Act
1980 the references to an
action
founded on a simple
contract
and an
action
upon a specialty shall respectively include references to an
action
brought in reliance on section 1 relating to a simple
contract
and an
action
brought in reliance on that section relating to a specialty.
(4)
A third
party
shall not, by virtue of section 1(5) or 3(4) or (6), be treated as a
party
to the
contract
for the purposes of any other
Act
(or any instrument made under any other
Act).
(1) Where–
(a)
a right
under section 1 to enforce a term ("the substantive term") is subject to a term providing for the submission of disputes to arbitration ("the arbitration agreement"), and
(b)
the arbitration agreement is an agreement in writing for the purposes of Part I of the [1996 c. 23.] Arbitration Act
1996,
the third
party
shall be treated for the purposes of that
Act
as a
party
to the arbitration agreement as regards disputes between himself and the promisor relating to the enforcement of the substantive term by the
third
party.
(2) Where–
(a)
a third
party
has a
right
under section 1 to enforce a term providing for one or more descriptions of dispute between the
third
party
and the promisor to be submitted to arbitration ("the arbitration agreement"),
(b)
the arbitration agreement is an agreement in writing for the purposes of Part I of the Arbitration Act
1996, and
(c)
the third
party
does not fall to be treated under subsection (1) as a
party
to the arbitration agreement,
the third
party
shall, if he exercises the
right,
be treated for the purposes of that
Act
as a
party
to the arbitration agreement in relation to the matter with respect to which the
right
is exercised, and be treated as having been so immediately before the exercise of the
right.
(1)
In its application to Northern Ireland, this Act
has effect with the modifications specified in subsections (2) and (3).
(2)
In section 6(2), for "section 14 of the [1985 c. 6.] Companies Act
1985" there is substituted "Article 25 of the [S.I. 1986/1032 (N.I. 6).] Companies (Northern Ireland) Order 1986".
(3) In section 7, for subsection (3) there is substituted–
"(3)
In Articles 4(a) and 15 of the [S.I. 1989/1339 (N.I. 11).] Limitation (Northern Ireland) Order 1989, the references to an action
founded on a simple
contract
and an
action
upon an instrument under seal shall respectively include references to an
action
brought in reliance on section 1 relating to a simple
contract
and an
action
brought in reliance on that section relating to a
contract
under seal.".
(4)
In the [1964 c. 23 (N.I.).] Law Reform (Husband and Wife) (Northern Ireland) Act
1964, the following provisions are hereby repealed–
(a) section 5, and
(b)
in section 6, in subsection (1)(a), the words "in the case of section 4" and "and in the case of section 5 the contracting
party"
and, in subsection (3), the words "or section 5".
(1)
This Act
may be cited as the
Contracts
(
Rights
of
Third
Parties)
Act
1999.
(2)
This Act
comes into force on the day on which it is passed but, subject to subsection (3), does not apply in relation to a
contract
entered into before the end of the period of six months beginning with that day.
(3)
The restriction in subsection (2) does not apply in relation to a contract
which–
(a)
is entered into on or after the day on which this Act
is passed, and
(b)
expressly provides for the application of this Act.
(4)
This Act extends as follows–
(a) section 9 extends to Northern Ireland only;
(b) the remaining provisions extend to England and Wales and Northern Ireland only.