Varying a contract after the third party has communicated assent (C(RTP)A 1999 s.2)
Rafael Costa pays Lakeside Travel Ltd £3,200 for a week's cruise for his mother, Maria Costa, who is named in the contract as the passenger. The contract states that Maria may enforce its terms and contains no provision about later variation. Lakeside sends Maria the booking details and she emails Lakeside: "Thank you, I accept and am delighted." A month later Rafael and Lakeside agree to transfer the booking to Rafael's brother instead. Maria has not been asked and objects. She has not yet spent any money in reliance on the cruise.
Which of the following best describes the effect of the agreement to transfer the booking?
Choose one answer to see the reasoning.
Worked answer
Correct answer A: It cannot alter Maria's entitlement without her consent, because she had communicated her assent to the term to Lakeside.
THE RULE TO REMEMBER
Once a third party with rights under s.1 has communicated assent to the promisor, or the promisor knows of or should foresee reliance, the parties cannot vary or rescind to affect those rights without consent.
Varying a contract after the third party has communicated assent (C(RTP)A 1999 s.2)
Under s.2(1) of the Contracts (Rights of Third Parties) Act 1999, where a third party has a right under s.1 to enforce a term, the parties may not by agreement rescind the contract or vary it so as to extinguish or alter the third party's entitlement without his consent if any one of three conditions is met. The first, in s.2(1)(a), is that the third party has communicated his assent to the term to the promisor. The others concern reliance. Section 2(2) provides that assent may be by words or conduct. Maria has a right under s.1 because the contract expressly says she may enforce it. She communicated her assent to Lakeside, the promisor, by email. The contract contains no term permitting variation without her consent. The transfer agreement therefore cannot take away her entitlement without her consent.
Why B is wrong: Section 2(1) restricts the contracting parties' freedom to vary once one of its conditions is met.
Why C is wrong: Notice is not enough; s.2(1) requires the third party's consent once she has communicated assent.
Why D is wrong: Maria's right is enforceable against Lakeside, the promisor, and the variation cannot extinguish it without her consent.
Why E is wrong: Reliance is only one trigger; communicated assent to the promisor under s.2(1)(a) is enough on its own.
A little more practice done.
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