Contracts (Rights of Third Parties) Act 1999: Difference between revisions

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{{a|boilerplate|
{{a|contract|
[[File:Third man.jpg|450px|thumb|center|Why the hostility towards third parties, [[counsellor]]? What did they ever to do you?]]
[[File:Third man.jpg|450px|thumb|center|Why the hostility towards third parties, [[counsellor]]? What did they ever to do you?]]
{{subtable|'''Sample [[CRTPA]] clause''', if you ''really'' must:<br>“No-one who is not a party to this agreement has any rights under the [[Contracts (Rights of Third Parties) Act 1999]] to enforce any of its terms.”}}}}It is now lost in the mists of history, but once upon a time there must have been a reason why lawyers of the international capital markets were so collectively hostile to the [[Contracts (Rights of Third Parties) Act 1999]], a small piece of well-intended legislation which allowed contractual parties to agree that persons benefiting from their contract, but who were not parties to it (and thus did not have the necessary “[[privity of contract]]” required by the [[common law]] to take action under it), might, upon a breach, be allowed to sue the breaching party directly to recover their loss.
{{subtable|'''Sample [[CRTPA]] clause''', if you ''really'' must:<br>“No-one who is not a party to this agreement has any rights under the [[Contracts (Rights of Third Parties) Act 1999]] to enforce any of its terms.”}}}}It is now lost in the mists of history, but once upon a time there must have been a reason why lawyers of the international capital markets were so collectively hostile to the [[Contracts (Rights of Third Parties) Act 1999]], a small piece of well-intended legislation which allowed contractual parties to agree that persons benefiting from their contract, but who were not parties to it (and thus did not have the necessary “[[privity of contract]]” required by the [[common law]] to take action under it), might, upon a breach, be allowed to sue the breaching party directly to recover their loss.
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Another place where CRTPA remains unloved is in the terms and conditions of [[Bearer security|bearer debt securities]]. This seems especially strange: since a bearer note is unilateral and, by its very terms, intended to benefit whomsoever in the world should for the time being have possession of it, exactly whom is one trying to exclude with this [[boilerplate]]? And how — presuming that person did not have possession of it (if she did, she would not be a third party) — would such a person formulate a claim that the issuer intended to benefit her?
Another place where CRTPA remains unloved is in the terms and conditions of [[Bearer security|bearer debt securities]]. This seems especially strange: since a bearer note is unilateral and, by its very terms, intended to benefit whomsoever in the world should for the time being have possession of it, exactly whom is one trying to exclude with this [[boilerplate]]? And how — presuming that person did not have possession of it (if she did, she would not be a third party) — would such a person formulate a claim that the issuer intended to benefit her?


For now, the [[Contracts (Rights of Third Parties) Act 1999]] remains unwanted. Shunned. Unloved; garnering only negative notice in the run-off [[boilerplate]] of our modern contractual frameworks. Perhaps it is time for a rethink?
For now, the [[Contracts (Rights of Third Parties) Act 1999]] remains unwanted. Shunned. Unloved; garnering only negative notice in the run-off [[boilerplate]] of our modern contractual frameworks. Perhaps it is time for a rethink?


{{sa}}
{{sa}}
*[[Contracts (Rights of Third Parties) Act 1999 clause]] —our [[boilerplate]] guide
*[[Contracts (Rights of Third Parties) Act 1999 - GMSLA Provision]]
*[[Contracts (Rights of Third Parties) Act 1999 - GMSLA Provision]]
*[[...and any of its Affiliates and any of its, or their, directors, officers, employees, contractors or professional advisers]]
*[[...and any of its Affiliates and any of its, or their, directors, officers, employees, contractors or professional advisers]]

Revision as of 11:07, 1 July 2022

The basic principles of contract
Why the hostility towards third parties, counsellor? What did they ever to do you?

Sample CRTPA clause, if you really must:
“No-one who is not a party to this agreement has any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.”

Formation: capacity and authority · representation · misrepresentation · offer · acceptance · consideration · intention to create legal relations · agreement to agree · privity of contract oral vs written contract · principal · agent

Interpretation and change: governing law · mistake · implied term · amendment · assignment · novation
Performance: force majeure · promise · waiver · warranty · covenant · sovereign immunity · illegality · severability · good faith · commercially reasonable manner · commercial imperative · indemnity · guarantee
Breach: breach · repudiation · causation · remoteness of damage · direct loss · consequential loss · foreseeability · damages · contractual negligence · process agent
Remedies: damages · adequacy of damages ·equitable remedies · injunction · specific performance · limited recourse · rescission · estoppel · concurrent liability
Not contracts: Restitutionquasi-contractquasi-agency

Index: Click to expand:

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It is now lost in the mists of history, but once upon a time there must have been a reason why lawyers of the international capital markets were so collectively hostile to the Contracts (Rights of Third Parties) Act 1999, a small piece of well-intended legislation which allowed contractual parties to agree that persons benefiting from their contract, but who were not parties to it (and thus did not have the necessary “privity of contract” required by the common law to take action under it), might, upon a breach, be allowed to sue the breaching party directly to recover their loss.

Look, who could possibly object to that worthy goal?

Well, the community of English lawyers did, most likely, through its instinctive, huffy, reactionary petulance — perhaps understandable in 1999 but, ladies and gentlemen, come on: haven’t we grown out of that now?

So the great canon of capital markets boilerplate is shot through with hostility to this poor act. There’s Para 27.10 of the 2010 GMSLA for example: the very last paragraph, when all else is said and done, they knife the poor CRTPA just when, perhaps, it thought it had finally got away with it.

It seems to your correspondent the CRTPA has its uses. To a careful user of the English language — and is there a carefuller one than a member of the worshipful company of solicitors? — it really ought not present much risk. If you don’t wish to confer a benefit on a third party then ... don’t. But if you have reason to, why not? To be sure there are cases where it might be interesting: where the contracting counterparty who might enforce on a beneficiary’s behalf is dead, or insolvent, suddenly indisposed to the well-being of his erstwhile friend, or just disinclined to take action for fear of upsetting a mendacious client.

So, set the beneficiary free to fight his own battles, independent of the whims of his privitous friend!

And these authorities:

Another place where CRTPA remains unloved is in the terms and conditions of bearer debt securities. This seems especially strange: since a bearer note is unilateral and, by its very terms, intended to benefit whomsoever in the world should for the time being have possession of it, exactly whom is one trying to exclude with this boilerplate? And how — presuming that person did not have possession of it (if she did, she would not be a third party) — would such a person formulate a claim that the issuer intended to benefit her?

For now, the Contracts (Rights of Third Parties) Act 1999 remains unwanted. Shunned. Unloved; garnering only negative notice in the run-off boilerplate of our modern contractual frameworks. Perhaps it is time for a rethink?

See also

References