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CONTRACT PRIVITY |
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THE LEGISLATION ... a person who is not a party to a contract (a "third party") may in his own right enforce a term of the contract... (Section 1 Contracts (Rights of Third Parties) Bill |
HOW IT WORKS WHAT:- When this Bill becomes Law the effect of section 1 will be to give Third Parties rights in contracts which benefit them. An obvious example is an Employer gaining rights in a subcontract. |
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| 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. (Section 1 (3) Contracts (Rights of Third Parties) Bill | WHO:- This definition would clearly cover Employer, Contractor , Subcontractor, etc, in most of the standard forms of contract. However, this term is very wide and the implications of who may be a third party with enforceable rights will have to be considered in individual cases. |
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| ... 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... (Section 2 Contracts (Rights of Third Parties) Bill |
PROTECTED:- Where a party gains a
right under section 1 he will be able to protect that right. However, this section has the
wider effect of enabling a third party to prevent variations to or cancellation of the
contract. |
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| 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). (Section 1 (5) Contracts (Rights of Third Parties) Bill |
REMEDIES:- The third party to the contract will have all means available to him that he would have in his own contract including being able to force performance of the contract which he is not a party to despite the wishes and even agreement of the two original contracting parties. | |||||||||
| The promisor shall have available to him by way of defence or set-off any matter that:- Arises from or in connection with the contract and is relevant to the term and, would have been available to him ... if the proceedings had been brought by the promisee. (Section 3 (2) Contracts (Rights of Third Parties) Bill | DEFENCE:- This section quite rightly preserves the right of the original parties to the contract to defend claims in the same way that they would have against the original contracting parrty. Section 1 (6) also preserves the right of the third party to rely on exclusion and limitation clauses in the contract. |
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