Third parties, subcontracting and transfers

Rights and obligations under a contract are not always performed by, or solely for the benefit of, the original contracting parties. Third parties may have rights in certain circumstances permitted by common law and by statute. A change in commercial circumstances may also trigger the need to alter the role of the original contracting parties. For example, a contracting party may need to change how it fulfils its obligations under the contract by bringing in a third party supplier to fulfil those obligations on its behalf, or the benefit of a contract may need to be transferred to another person as a result of a business sale or group re-organisation.

It is therefore in the interests of both contracting parties to manage the extent of third party involvement (where permissible) under the terms of the contract.

Contracts and third party rights

Even where a person is not a party to a contract, they could, in certain circumstances, be liable for obligations under it, or might be able to use it for their benefit. Their position in relation to the contract will be determined by:

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