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You are here: BAILII >> Databases >> The Law Commission >> Privity of Contract: Contracts for the Benefit of Third Parties [1996] EWLC 242(APPENDIX B) (31 July 1996) URL: http://www.bailii.org/ew/other/EWLC/1996/242(APPENDIX_B).html Cite as: [1996] EWLC 242(APPENDIX B) |
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APPENDIX B
Legislation From Some Other Jurisdictions(1)
Property Law Act 1969, section 11:
"(2) Except in the case of a conveyance or other instrument to which subsection (1) of this section applies, where a contract expressly in its terms purports to confer a benefit directly on a person who is not named as a party to the contract, the contract is, subject to subsection (3) of this section, enforceable by that person in his own name but -
(a) all defences that would have been available to the defendant in an action or proceeding in a court of competent jurisdiction to enforce the contract had the plaintiff in the action or proceeding been named as a party to the contract, shall be so available;
(b) each person named as a party to the contract shall be joined as a party to the action or proceeding; and
(c) such defendant in the action or proceeding shall be entitled to enforce as against such plaintiff, all the obligations that in the terms of the contract are imposed on the plaintiff for the benefit of the defendant.
(3) Unless the contract referred to in subsection (2) of this section otherwise provides, the contract may be cancelled or modified by the mutual consent of the persons named as parties thereto at any time before the person referred to in that subsection has adopted it either expressly or by conduct."
"(1) A promisor who, for a valuable consideration moving from the promisee, promises to do or refrain from doing an act or acts for the benefit of a beneficiary shall, upon acceptance by the beneficiary, be subject to a duty enforceable by the beneficiary to perform that promise.
(2) Prior to acceptance the promisor and promisee may without the consent of the beneficiary vary or discharge the terms of the promise and any duty arising therefrom.
(3) Upon acceptance -
(a) the beneficiary shall be entitled in his own name to such remedies and relief as may be just and convenient for the enforcement of the duty of the promisor; and relief by way of specific performance, injunction or otherwise shall not be refused solely on the ground that, as against the promisor, the beneficiary may be a volunteer;
(b) the beneficiary shall be bound by the promise and subject to a duty enforceable against him in his own name to do or refrain from doing such act or acts (if any) as may by the terms of the promise be required of him;
(c) the promisor shall be entitled to such remedies and relief as may be just and convenient for the enforcement of the duty of the beneficiary;
(d) the terms of the promise and the duty of the promisor or the beneficiary may be varied or discharged with the consent of the promisor, the promisee and the beneficiary.
(4) Subject to subsection (1), any matter which would in proceedings not brought in reliance on this section render a promise void, voidable or unenforceable, whether wholly or in part, or which in proceedings (not brought in reliance on this section) to enforce a promissory duty arising from a promise is available by way of defence shall, in like manner and to the like extent, render void, voidable or unenforceable or be available by way of defence in proceedings for the enforcement of a duty to which this section gives effect.
(5) In so far as a duty to which this section gives effect may be capable of creating and
creates an interest in land, such interest shall, subject to section 12, be capable of being created and of subsisting in land under the provisions of any Act but subject to the provisions of that Act.
(6) In this section-
(a) "acceptance" means an assent by words or conduct communicated by or on behalf of the beneficiary to the promisor, or to some person authorised on his behalf, in the manner (if any), and within the time, specified in the promise or, if no time is specified, within a reasonable time of the promise coming to the notice of the beneficiary.
(b) " beneficiary" means a person other than the promisor or promisee, and includes a person who, at the time of acceptance is identified and in existence, although that person may not have been identified or in existence at the time when the promise was given;
(c) " promise" means a promise-
(i) which is or appears to be intended to be legally binding; and
(ii) which creates or appears to be intended to create a duty enforceable by a beneficiary,
and includes a promise whether made by deed, or in writing, or, subject to this Act, orally, or partly in writing and partly orally;
(d) " promisee" means a person to whom a promise is made or given;
(e) " promisor" means a person by whom a promise is made or given.
(7) Nothing in this section affects any right or remedy which exists or is available apart from this section.
(8) This section applies only to promises made after the commencement of this Act."
"(1) Where a person who is not a party to a contract of general insurance is specified or referred to in the contract, whether by name or otherwise, as a person to whom the insurance cover provided by the contract extends, that person has a right to recover the amount of his loss from the insurer in accordance with the contract notwithstanding that he is not a party to the contract.
(2) Subject to the contract, a person who has such a right:
(a) has, in relation to his claim, the same obligations to the insurer as he would have if he were the insured; and
(b) may discharge the insured's obligation in relation to the loss.
(3) The insurer has the same defences to an action under this section as he would have in an action by the insured.
(4) Where a contract of life insurance effected by a person upon his own life is expressed to be for the benefit of a person specified or referred to in the contract, whether by name or otherwise, that second-mentioned person has a right to recover the moneys payable under the contract from the insurer in accordance with the contract notwithstanding that the second-mentioned person is not a party to the contract, and the moneys payable under the contract do not form part of the estate of the person whose life is insured and are not subject to his debts.
(5) Section 94 of the Life Insurance Act 1945 does not apply in relation to a policy within the meaning of that Act that is entered into after the commencement of this Act."
Contracts (Privity) Act 1982:
" 1. Short Title and commencement- (1) This Act may be cited as the Contracts (Privity) Act 1982.
(2) This Act shall come into force on the first day of April 1983.
2. Interpretation- In this Act, unless the context otherwise requires,-
" Benefit" includes-
(a) any advantage; and
(b) any immunity; and
(c) any limitation or other qualification of-
(i) An obligation to which a person (other than a party to the deed or contract) is or may be subject; or
(ii) A right to which a person (other than a party to the deed or contract) is or may be entitled; and
(d) Any extension or other improvement of a right or rights to which a person (other than a party to the deed or contract) is or may be entitled:
"Beneficiary", in relation to a promise to which section 4 of this Act apples, means a person (other than the promisor or promisee) on whom the promise confers, or purports to confer, a benefit:
"Contract" includes a contract made by deed or in writing, or orally, or partly in writing and partly orally or implied by law:
"Court" means-
(a) The High Court; or
(b) A District Court that has jurisdiction under section 10 of this Act; or
(c) A Small Claims Tribunal that has jurisdiction under section 11 of this Act:
"Promisee", in relation to a promise to which section 4 of this Act applies, means a person who is both-
(a) A party to the deed or contract; and
(b) A person to whom the promise is made or given:
"Promisor", in relation to a promise to which section 4 of this Act applies, means a person who is both-
(a) A party to the deed or contract; and
(b) A person by whom the promise is made or given.
3. Act to bind the Crown- This Act shall bind the Crown.
4. Deeds or contracts for the benefit of third parties- Where a promise contained in a deed or contract confers, or purports to confer, a benefit on a person, designated by name, description, or reference to a class, who is not a party to the deed or contract (whether or not the person is in existence at the time when the deed or contract is made), the promisor shall be under an obligation, enforceable at the suit of that person, to perform that promise:
Provided that this section shall not apply to a promise which, on the proper construction of the deed or contract, is not intended to create, in respect of the benefit, an obligation enforceable at the suit of that person.
5. Limitation on variation or discharge of promise- (1) Subject to sections 6 and 7 of this Act, where, in respect of a promise to which section 4 of this Act applies,-
(a) The position of a beneficiary has been materially altered by the reliance of that beneficiary or any other person on the promise (whether or not that beneficiary or that other person has knowledge of the precise terms of the promise); or
(b) A beneficiary has obtained against the promisor judgment upon the promise; or
(c) A beneficiary has obtained against the promisor the award of an arbitrator upon a submission relating to the promise,-
the promise and the obligation imposed by that section may not be varied or discharged without the consent of that beneficiary.
(2) For the purposes of paragraph (b) or paragraph (c) of subsection (1) of this section,-
(a) An award of an arbitrator or a judgment shall be deemed to be obtained when it is pronounced notwithstanding that some act, matter, or thing needs to be done to record or perfect it or that, on application to a court or on appeal, it is varied:
(b) An award of an arbitrator or a judgment set aside on application to a Court or on appeal shall be deemed never to have been obtained.
6. Variation or discharge of promise by agreement or in accordance with express provision for variation or discharge- Nothing in this Act prevents a promise to which section 4 of this Act applies or any obligation imposed by that section from being varied or discharged at any time -
(a) By agreement between the parties to the deed or contract and the beneficiary; or
(b) By any party or parties to the deed or contract if -
(i) The deed or contract contained, when the promise was made, an express provision to that effect; and
(ii) The provision is known to the beneficiary (whether or not the beneficiary has knowledge of the precise terms of the provision); and
(iii) The beneficiary had not materially altered his position in reliance on the promise before the provision became known to him; and
(iv) The variation or discharge is in accordance with the provision.
7. Power of Court to authorise variation or discharge-(1) Where, in the case of a promise to which section 4 of this Act applies or of an obligation imposed by that section,-
(a) The variation or discharge of that promise or obligation is precluded by section 5(1)(a) of this Act; or
(b) It is uncertain whether the variation or discharge of that promise is so precluded,-
a Court, on application by the promisor or promisee, may, if it is just and practicable to do so, make an order authorising the variation or discharge of the promise or obligation or both on such terms and conditions as the Court thinks fit.
(2) If a Court-
(a) Makes an order under subsection (1) of this section; and
(b) Is satisfied that the beneficiary has been injuriously affected by the reliance of the beneficiary or any other person on the promise or obligation,-
the Court shall make it a condition of the variation or discharge that the promisor pay to the beneficiary, by way of compensation, such sum as the Court thinks just.
8. Enforcement by beneficiary-The obligation imposed on a promisor by section 4 of this Act may be enforced at the suit of the beneficiary as if he were a party to the deed or contract, and relief in respect of the promise, including relief by way of damages, specific performance, or injunction, shall not be refused on the ground that the beneficiary is not a party to the deed or contract in which the promise is contained or that, as against the promisor, the beneficiary is a volunteer.
9. Availability of defences-(1) This section applies only where, in proceedings brought in a Court or an arbitration, a claim is made in reliance on this Act by a beneficiary against a promisor.
(2) Subject to subsections (3) and (4) of this section, the promisor shall have available to him, by way of defence, counterclaim, set-off or otherwise, any matter which would have been available to him-
(a) If the beneficiary had been a party to the deed or contract in which the promise is contained; or
(b) If -
(i) The beneficiary were the promisee; and
(ii) The promise to which the proceedings relate had been made for the benefit of the promisee; and
(iii) The proceedings had been brought by the promisee.
(3) The promisor may, in the case of a set-off or counterclaim arising by virtue of subsection (2) of this section against the promisee, avail himself of that set-off or counterclaim against the beneficiary only if the subject-matter of that set-off or counterclaim arises out of or in connection with the deed or contract in which the promise is contained.
(4) Notwithstanding subsections (2) and (3) of this section, in the case of a counterclaim brought under either of those subsections against a beneficiary,-
(a) The beneficiary shall not be liable on the counterclaim, unless the beneficiary elects, with full knowledge of the counterclaim, to proceed with his claim against the promisor; and
(b) If the beneficiary so elects to proceed, his liability on the counterclaim shall not in any event exceed the value of the benefit conferred on him by the promise.
10. Jurisdiction of District Courts- (1) A District Court shall have jurisdiction to exercise any power conferred by section 7 of this Act in any case where-
(a) The occasion for the exercise of the power arises in the course of civil proceedings properly before the court; or
(b) The value of the consideration for the promise of the promisor is not more than $12,000; or
(c) The parties agree, in accordance with section 37 of the District Courts Act 1947, that a District Court shall have jurisdiction to determine the application.
(2) For the purposes of section 43 of the District Courts Act 1947, an application made to a District Court under section 7 of this Act shall be deemed to be an action.
11. Jurisdiction of Small Claims Tribunal- (1) A Small Claims Tribunal established under the Small Claims Tribunals Act 1976 shall have jurisdiction to exercise any power conferred by section 7 of this Act in any case where-
(a) The occasion for the exercise of the power arises in the course of proceedings properly before that Tribunal; and
(b) The value of the consideration for the promise of the promisor is not more than $500.
(2) A condition imposed by the Small Claims Tribunal under section 7(2) of this Act shall not require the promisor to pay a sum exceeding $500 and an order of a Tribunal that exceeds any such restriction shall be entirely of no effect.
12. Amendments of Arbitration Act 1908- The Second Schedule to the Arbitration Act 1908 is hereby amended by inserting, after clause 10B (as inserted by section 14(2) of the Contractual Remedies Act 1979), the following clause:
"10C. The arbitrators or umpire shall have the same power as the Court to exercise any of the powers conferred by section 7 of the Contracts (Privity) Act 1982."
13. Repeal-Section 7 of the Property Law Act 1952 is hereby repealed.
14. Savings-(1) Subject to section 13 of this Act, nothing in this Act limits or affects-
(a) Any right or remedy which exists or is available apart from this Act; or
(b) The Contracts Enforcement Act 1956 or any other enactment that requires any contract to be in writing or to be evidenced by writing; or
(c) Section 49A of the Property Law Act 1952; or
(d) The law of agency; or
(e) The law of trusts.
(2) Notwithstanding the repeal effected by section 13 of this Act, section 7 of the Property Law Act 1952 shall continue to apply in respect of any deed made before the commencement of this Act.
15. Application of Act-Except as provided in section 14(2) of this Act, this Act does not apply to any promise, contract, or deed made before the commencement of this Act."
Consultation took place in 1991 and closed on 30 June 1992. The descriptions of consultees
Local Authorities Associations
Lord Chancellor's Department
His Honour Judge Bowsher QC
Council of H M Circuit Judges
The Hon Mr Justice May
The Hon Mr Justice Millett
The Rt Hon The Lord Mustill
His Honour Judge John Newey QC
Rt Hon Lord Justice Parker
The Hon Mr Justice Phillips
The Rt Hon Lord Jauncey of Tullichettle
Walter Aylen QC
Sir Wilfred Bourne KCB QC
R O Havery
G F Hawker
Chambers of Donald Keating QC
John Lindsay QC
Andrew Longmore QC
Robert Nelson QC
Christopher Thomas QC
Allen & Overy
A G J Berg
Clifford Chance
Cyril Sweett & Partners
D M E Evans
Freshfields
J H L Leckie
G L Leigh
Lovell White Durrant
Masons
McKenna & Co
Norton Rose
R A Shadbolt
Simmons & Simmons
W H Thomas
Family Law Bar Association
General Council of the Bar
Holborn Law Society
Institute of Legal Executives
The Law Society
Society of Public Teachers of Law
Professor John Adams, University of Kent
Professor Dr Christian V Bar, Universität Osnabrück
Professor Hugh Beale, University of Warwick
Andrew Bell, Manchester University
Professor Joost Blom, University of British Columbia
Professor Roger Brownsword, Sheffield University
Andrew Burrows, Lady Margaret Hall
Professor Hugh Collins, London School of Economics
Professor Brian Coote, University of Auckland
R O'Dair, University College London
Professor Aubrey Diamond, Notre Dame University
Professor Brice Dickson, University of Ulster
Professor M A Eisenberg, University of California
J D Feltham, Magdalen College Oxford
Professor Robert Flannigan, University of British Columbia
John G Fleming, University of California
Simon Gardner, Lincoln College Oxford
Roger Halson, University College London
Charles Harpum, Downing College Cambridge
Professor D J Hayton, King's College London
Peter Kincaid, MacQuarrie University
Professor Dr Werner Lorenz, Universität München
Professor Robert Merkin, Exeter University
Professor J R Midgley, Rhodes University
Professor Anthony Ogus, Manchester University
Dr F M B Reynolds, Worcester College Oxford
Colin Scott, London School of Economics
W J Swadling, Queen Mary and Westfield College London
Andrew Tettenborn, Pembroke College Cambridge
Professor G H Treitel, All Souls College Oxford
Professor A J Waters, University of Maryland
Dr Simon Whittaker, St John's College Oxford
Architects & Surveyors Institute
Association of British Insurers
British Bankers' Association
Building Employers Confederation
Chartered Institute of Arbitrators
Confederation of British Industry
Confederation of Construction Specialists
Construction Industry Council
Consumers' Association
Country Landowners Association
Federation of Civil Engineering Contractors
Finance and Leasing Association
Institute of Actuaries
Institute of Chartered Accountants
Institute of Civil Engineers
London Maritime Arbitrators Association
Motor Insurers' Bureau
National Federation of Consumer Groups
National Association of Estate Agents
National Consumer Council
Royal Institute of British Architects
Royal Institution of Chartered Surveyors
Securities and Futures Authority
Society of Construction Arbitrators
Wren Insurance Association Limited
John Barber
G M Beresford Hartwell
J M Kilby
Ove Arup Partnership
Contract, held at the Institute of Advanced Legal Studies, Russell
Square on 2-3 April 1992, which examined the Law Commission's
The descriptions of consultees may have altered since the date of the conference.
Jack Beatson, Law Commissioner
Andrew Bell, Manchester University
Andrew Burrows, Lady Margaret Hall
Professor Roger Brownsword, Sheffield University
Professor Hugh Collins, London School of Economics
R O'Dair, University College London
Professor Aubrey Diamond, Notre Dame University
Professor R Goode, St John's College Oxford
Roger Halson, University College London
Charles Harpum, Downing College Cambridge
Professor Robert Merkin, Exeter University
H McLean, Trinity College Cambridge
Professor Anthony Ogus, Manchester University
F Rose, St John's College Cambridge
Dr F M B Reynolds, Worcester College Oxford
Colin Scott, London School of Economics
W J Swadling, Queen Mary and Westfield College London
Andrew Tettenborn, Pembroke College Cambridge
Dr Simon Whittaker, St John's College Oxford
(1)1 The legislation produced in this publication is reproduced by permission but does not purport to be the official authorised version. We have been requested to advise readers that the authorised version of the Queensland legislation is available from GOPRINT Publications Division, PO Box 364, Woolloongabba Qld 4102, Australia. Telephone (07) 3246 3399.
