Contracts (Rights of Third Parties) Act 2001

This Act is the Contracts (Rights of Third Parties) Act 2001.

Subject to subsection (3), this Act does not apply in relation to a contract entered into before the end of the period of 6 months from 1 January 2002.

The restriction in subsection (2) does not apply in relation to a contract which —

Subject to the provisions of this Act, a person who is not a party to a contract (called in this Act a third party) may, in the third party’s own right, enforce a term of the contract if —

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.

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.

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.

For the purpose of exercising a third party’s right to enforce a term of the contract, there is to be available to the third party any remedy that would have been available to the third party in an action for breach of contract if the third party had been a party to the contract (and the rules relating to damages, injunctions, specific performance and other remedy apply accordingly) and such remedy must not be refused on the ground that, as against the promisor, the third party is a volunteer.

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 are to be construed as references to the third party availing himself, herself or itself of the exclusion or limitation.

In this Act, in relation to a term of a contract which is enforceable by a third party —

“promisee” means the party to the contract by whom the term is enforceable against the promisor;

“promisor” means the party to the contract against whom the term is enforceable by the third party.

Subject to this section, where a third party has a right under section 2 to enforce a term of the contract, the parties to the contract may not, by agreement, rescind the contract, or vary the contract in such a way as to extinguish or alter the third party’s entitlement under that right, without the third party’s consent if —

The assent mentioned in subsection (1)(a) —

Subsection (1) is subject to any express term of the contract under which —

Where the consent of a third party is required under subsection (1) or (3), the court or arbitral tribunal may, on the application of the parties to the contract, dispense with such consent if the court or tribunal is satisfied that —

The court or arbitral tribunal may, on the application of the parties to a contract, dispense with any consent that may be required under subsection (1)(c) if it is satisfied that it cannot reasonably be ascertained whether or not the third party has in fact relied on the term of the contract.

If the court or arbitral tribunal 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.

The jurisdiction conferred on the court by subsections (4), (5) and (6) is exercisable by both the General Division of the High Court and a District Court.

Subsections (2) to (5) apply where proceedings for the enforcement of a term of a contract are brought by a third party in reliance on section 2.

The promisor has available to the promisor, by way of defence or set‑off, any matter that —

The promisor also has available to the promisor, by way of defence or set‑off, any matter if —

The promisor also has available to the promisor —

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.

Where, in any proceedings brought against a third party, the third party seeks to enforce a term of a contract (including, in particular, a term purporting to exclude or limit liability) in reliance on section 2, the third party may not do so if the third party could not have done so (whether by reason of any particular circumstances relating to the third party or otherwise) had the third party been a party to the contract.

Section 2 does not confer any right on a third party in the case of a contract on a bill of exchange, promissory note or other negotiable instrument.

Section 2 does not confer any right on a third party in the case of any contract binding on a company and its members under section 39 of the Companies Act 1967.

Section 2 does not confer any right on a third party in the case of any registration document of a limited liability partnership registered under the Limited Liability Partnerships Act 2005 or any limited liability partnership agreement as defined in that Act.

Section 2 does not confer any right on a third party to enforce any term of a contract of employment against an employee.

Section 2 does not confer any right on a third party in the case of —

In subsection (5) —

“appropriate international transport convention” means —

“contract for the carriage of goods by sea” means a contract of carriage —

For the purposes of subsection (6), “bill of lading”, “sea waybill” and “ship’s delivery order” have the meanings given by the Bills of Lading Act 1992.

Section 2 does not affect any right or remedy of a third party that exists or is available apart from this Act.

Section 2(2) of the Unfair Contract Terms Act 1977 (exclusion of or restriction on liability for negligence) does 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 2.

In section 6 of the Limitation Act 1959, the references to an action founded on a contract include references to an action brought in reliance on section 2 relating to a contract.

A third party is not, by virtue of section 2(5) or 4(4) or (6), treated as a party to the contract for the purposes of any other written law.

Where —

Where —