Third party enforcing a term that benefits them (Contracts (Rights of Third Parties) Act 1999 s.1)
Hannah Clarke engages Ridgeway Builders Ltd to build a garden wall at her home in England for £8,000. Because the work will disturb her neighbour, the written contract includes a term: "Ridgeway will also repaint the boundary fence of Mr Leon Baptiste of 14 Elm Road at no extra charge." Nothing in the contract says who may enforce its terms or suggests that the parties did not intend Leon to enforce this one. Ridgeway builds the wall but refuses to repaint Leon's fence. Hannah is not interested in pursuing it.
Which of the following best describes whether Leon can enforce the fence-painting term against Ridgeway?
Choose one answer to see the reasoning.
Worked answer
Correct answer E: Yes, because the term names Leon and purports to confer a benefit on him, and nothing shows that the parties did not intend it to be enforceable by him.
THE RULE TO REMEMBER
A named or identified third party may enforce a contract term that purports to confer a benefit on him unless the contract, properly construed, shows the parties did not intend this (C(RTP)A 1999 s.1).
Third party enforcing a term that benefits them (Contracts (Rights of Third Parties) Act 1999 s.1)
Section 1(1) of the Contracts (Rights of Third Parties) Act 1999 allows a person who is not a party to a contract to enforce a term in his own right if the contract expressly provides that he may, or, subject to s.1(2), the term purports to confer a benefit on him. Under s.1(2), the second route does not apply if on a proper construction of the contract the parties did not intend the term to be enforceable by the third party. Section 1(3) requires the third party to be expressly identified by name, as a member of a class or by description. Leon is named and the term purports to confer a benefit on him: a repainted fence. Nothing in the contract rebuts the presumption in s.1(2). Leon can therefore enforce the term himself, even though Hannah will not act.
Why A is wrong: The 1999 Act creates a statutory exception to privity where s.1 is satisfied, as it is here.
Why B is wrong: Express provision is only one route; s.1(1)(b) also applies where the term purports to confer a benefit on the third party.
Why C is wrong: The Act lets a third party enforce a term without having provided consideration.
Why D is wrong: The Act does not require the third party to sign or agree to the contract before he can enforce a term under s.1.
A little more practice done.
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A GOOD HABIT, DELIVERED
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