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Boilerplate clauses

Richard Christou considers the effects of the
Contracts (Rights of Third Parties) Act 1999 on third party rights and obligations and privity of contract

16 August 2002

The basic principle of third party rights and obligations and the rules of law relating to privity of contract is that the contract generates rights and obligations only between the parties to the contract. Although the contract may purport to confer a benefit on a third party, he cannot enforce it against the contracting parties (Scruttons Ltd v Midland Silicones Ltd [1962] AC 1, HL). Similarly, where the contract attempts to impose an obligation on a third party, the contracting parties cannot enforce it against him even if he has notice of it (Port Line Ltd v Ben Line Steamers Ltd [1958] 2 QB 146). New Act: main provisions This position has been changed by the Contracts (Rights of Third Parties) Act 1999. Section 1: s 1(1) of the Act states: “Subject to the provisions of the 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 ma...

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