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Contracts (Rights of Third Parties) Bill [H.L.]
This is the text of the Contracts (Rights of Third Parties) Bill [H.L.], as amended in Committee in the House of Lords and printed on 2 February 1999 | |
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Contracts (Rights of Third Parties) Bill [H.L.] | |
B I L L [AS AMENDED IN COMMITTEE] TO Make provision for the enforcement of contractual terms by third parties. 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:- | |
Right of third party to enforce contractual term. | 1. - (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- |
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(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- | |
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Variation and cancellation of contract. | 2. - (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 without his consent cancel the contract, or vary it in such a way as to extinguish, or alter his entitlement under, that right, if- |
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(2) The assent referred to in subsection (1)(a)- | |
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(3) Subsection (1) is subject to any express term of the contract under which- | |
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(4) Where the consent of a third party is required under subsection (1) or (3), the court may, on the application of the parties to the contract, dispense with his consent if satisfied- | |
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(5) The court 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 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 by subsections (4) to (6) is exercisable by both the High Court and a county court. | |
Defences etc. available to promisor. | 3. - (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- | |
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(3) The promisor shall also have available to him by way of defence or set-off any matter if- | |
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(4) The promisor shall also have available to him- | |
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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. | |
Enforcement of contract by promisee. | 4. Section 1 does not affect any right of the promisee to enforce any term of the contract. |
Protection of promisor from double liability. | 5. 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- |
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then, in any proceedings brought in reliance on that section by the third party, the court 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. | |
Exceptions. | 6. - (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 Companies Act 1985. | |
(3) Section 1 confers no right on a third party to enforce- | |
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(4) In subsection (3)- | |
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(5) Section 1 confers no rights on a third party in the case of- | |
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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- | |
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(7) For the purposes of subsection (6)- | |
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(8) In subsection (5) "the appropriate international transport convention" means- | |
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Supplementary provisions relating to third party. | 7. - (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 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 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). | |
Short title, commencement and extent. | 8. - (1) This Act may be cited as the Contracts (Rights of Third Parties) Act 1999. |
(2) This Act comes into force at the end of the period of six months beginning with the day on which it is passed and does not apply in relation to contracts entered into before the end of that period. | |
(3) This Act extends to England and Wales only. |
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© Parliamentary copyright 1999 | Prepared 3 February 1999 |