Contract (Third Party Rights) (Scotland) Act 2017

Document Number:2017 asp 5
 
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The Bill for this Act of the Scottish Parliament was passed by the Parliament on 21 st September 2017 and received Royal Assent on 30 th October 2017

An Act of the Scottish Parliament to make provision about the enforcement of contractual terms by third parties.

1 Creation of a third-party right

(1) A person who is not a party to a contract acquires a third-party right under it where—

(a) the contract contains an undertaking that one or more of the contracting parties will do, or not do, something for the person’s benefit, and

(b) at the relevant time it was the intention of the contracting parties that the person should be legally entitled to enforce or otherwise invoke the undertaking.

(2) The third-party right is the right to enforce or otherwise invoke the undertaking.

(3) The person who is to acquire a third-party right under a contract must be identifiable from the contract by being either named or described in it.

(4) A third-party right may be acquired by a person despite the fact that at the relevant time the person—

(a) was not in existence, or

(b) did not fall within the description of persons (if any) whom the contracting parties intended should benefit from, and be legally entitled to enforce or otherwise invoke, the undertaking.

(5) In subsections (1)(b) and (4) , “the relevant time” means—

(a) the time when the contract was constituted, or

(b) if the undertaking was added to the contract by a modification of its terms, the time when the modification was made.

2 Creation: further provision

(1) This section makes provision elaborating on section 1.

(2) The undertaking referred to in section 1(1)(a) may be one which depends on something happening or not happening (whether or not it is certain that that thing will or will not happen).

(3) The intention of the contracting parties referred to in section 1(1)(b) may be express or implied.

(4) A person may acquire a third-party right to enforce or otherwise invoke an undertaking despite the fact that—

(a) the undertaking may be cancelled or modified,

(b) there has been no delivery, intimation or communication of the undertaking to the person.

(5) The reference in section 1(1)(a) to an undertaking to do something includes an undertaking to indemnify a person.

(6) The reference in section 1(1)(a) to an undertaking not to do something includes an undertaking—

(a) not to hold a person liable in a matter,

(b) not to enforce, or not to enforce in full, a person’s liability in a matter.

(7) This Act is without prejudice to any other enactment, or rule of law, that imposes requirements which must be fulfilled if an enforceable obligation is to be created.

3 Contracting parties’ freedom to alter third party’s entitlement

(1) An undertaking contained in a contract which has given rise to a third-party right may be cancelled or modified by the contracting parties.

(2) Nothing in this Act...

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