Section 1 of the Act repeals the former common law rule that a third party cannot enforce the terms of a contract set out in Dunlop Pneumatic Tyre Co Ltd v. Selfridge & Co Ltd, as well as the rule that a third party cannot sue the promisor set out in tweddle v. Atkinson. [19] It allows a third party to apply contractual terms in one of two situations: first, where the third party is expressly designated in the contract as a person authorized to do so and, second, where the contract “purports to confer an advantage on the third party”. [15] [20] If a third party has rights, the contracting parties may not terminate or modify the contract in order to extinguish or change the third party`s claim without consent. The second situation, where a third party can apply conditions that “claim to give it an advantage”, was described by Meryll Dean as too broad, and one of the views put forward in parliamentary debates was that it was “unfeasible” in situations such as complex construction contracts involving dozens of subcontractors with contract chains. [25] This argument and a proposal to exempt the construction industry from the act were rejected by both the Law Commission and Parliament. [25] The phrase “purporting to grant a benefit” was originally found in the Law Commission document of 1937 and used in the New Zealand Contracts (Privity) Act 1982 before being adopted for English law. [26] These can be troublesome (p.B. additional documents) or insecure (p.B. not reviewed by the courts). In fact, most common law jurisdictions now have laws on the contractual rights of third parties.
The Regulation is essentially based on the England and Wales Contracts (Rights of Third Parties) Act 1999 (the “Act”). The Contracts (Rights of Third Parties) Act 1999 (c 31) is a Bill of the British Parliament that significantly reformed the doctrine of privacy at common law, “thereby removing one of the most unpopular and criticised places from the legal landscape”. [2] The second rule of the doctrine of deprivation, according to which a third party could not perform a contract that he had not taken into account, had been widely criticized by lawyers, academics and judges. Proposals for reform by an Act of Parliament were first made in 1937 by the Legislative Review Commission in its sixth interim report. Until the 1990s, the government took no further action when the Law Commission proposed a new bill in 1991 and submitted its final report in 1996. The bill was introduced in the House of Lords in December 1998 and sent to the House of Commons on June 14, 1999. It received Royal Assent on November 11, 1999 and came into force immediately as the Contracts (Rights of Third Parties) Act, 1999 ..