← The hardest concepts in United Kingdom law
In one breath
Only the parties to a contract can sue on it, so an outsider cannot normally enforce a promise made for their benefit. The Contracts (Rights of Third Parties) Act 1999 lets an identified outsider enforce a term if the contract says so or the term purports to benefit them, unless the parties did not intend that.
The picture
The table booked in a friend’s name
You book a restaurant table and pay the deposit so that a friend can have a birthday dinner. If the restaurant gives the table away, you can complain, since you made the deal. Your friend, who made no deal and paid nothing, has no claim on the booking. Now suppose the booking says, “This table is for Anna Reyes, who may claim it in her own right.” Then Anna, named in the booking, can insist on it herself.
That is privity. A contract is a private pact: only the parties hold its rights and carry its duties. The 1999 Act is the “Anna Reyes” clause. A person outside the contract can enforce a term if the contract expressly says so, or if the term purports to confer a benefit on them. The outsider must be identified by name, as a member of a class or by description, though they need not exist when the contract is made. The parties may exclude the Act, and their freedom to cancel or vary the deal is limited once the outsider has relied on it or assented to it.
Where the picture stops working
A booking is simple, but the Act has qualifications. The outsider’s claim is subject to the contract’s own terms and defences, and the Act does nothing about the burden side: a stranger cannot be bound by a contract’s duties. In Scots law a third party can enforce a contract made for their benefit where the parties intended to give them an enforceable right, under the old rule of jus quaesitum tertio.
How it really works
- 1Identify the parties: who made the promises and who gave consideration. At common law only a party who gave consideration can sue (Dunlop v Selfridge).
- 2Ask whether the claimant is a stranger trying to enforce a term. If so, the common law answer is no (Tweddle v Atkinson).
- 3Look at the 1999 Act. A third party may enforce a term if the contract expressly provides that they may, or if the term purports to confer a benefit on them, unless on a proper reading the parties did not intend it to be enforceable by them.
- 4Check that the third party is identified in the contract by name, as a member of a class or by description.
- 5Remember that the third party’s claim is subject to the terms and defences that would apply between the parties.
Why people get it wrong
- Assuming that a promise made for someone’s benefit is enforceable by them. At common law it is not.
- Thinking the 1999 Act abolished privity. It is a limited exception which the parties can exclude by their wording.
- Imagining that a contract can impose duties on strangers. Third parties can take benefits under the Act, not burdens.
- Overlooking the other routes for a disappointed outsider, such as a claim in tort for negligence, or the promisee suing and recovering for the outsider’s loss in suitable cases.
A worked example
The facts are invented
Alder Ltd hires Fenwick Catering to provide a leaving party for “all members of the Alder accounts team”. Tess, a team member, falls ill after a badly stored dish. She made no contract with Fenwick, and Alder was not the one who fell ill.
At common law Tess could not sue on the contract. Under the 1999 Act the term about food for the team members purports to benefit a class to which Tess belongs, so she can enforce it, unless a proper reading shows the parties did not intend her to have that right, or the contract excludes it. She is also exposed to Fenwick’s defences, such as a valid limit on liability in the contract. She may have a separate claim in tort, which does not depend on privity.
Try it
Ana contracts with a builder to repair the roof of a house she has promised to leave to her niece, Bea. The builder does the work badly. The contract does not mention Bea. Can Bea sue the builder on the contract?
Landmark authorities
Read the sources themselves; this list is a starting point.
- Tweddle v Atkinson, (1861) 1 B & S 393
- Dunlop Pneumatic Tyre Co v Selfridge & Co, [1915] AC 847
- Contracts (Rights of Third Parties) Act, 1999
Where to go next
More hard concepts in United Kingdom law
- Consideration and promissory estoppel (Contract law)
- Mistake and misrepresentation (Contract law)
- Penalty clauses and liquidated damages (Contract law)
This page is an educational overview. It is not legal advice and not a substitute for the sources: the statute, the rule, the case itself. The United Kingdom has three legal systems: England and Wales, Scotland, and Northern Ireland. These pages mostly describe the law of England and Wales and say where Scots law differs when it clearly does; Northern Ireland law is often similar to English law but is not covered separately. Parliament is sovereign, but the devolved legislatures also make law within their powers. Each page states the usual formulation of the rule and names landmark decisions; check the primary sources before relying on any rule.