Contracts (Rights of Third Parties) Act 1999

The Contracts (Rights of Third Parties) Act 1999 (C(RTP)A 1999) created an exception to a fundamental principle of English law: the rule of privity of contract whereby only those who are party to a contract can enforce rights under it. C(RTP)A 1999 creates an entitlement for a person, who is not party to a contract, to enforce a term of that contract in its own right where the contract confers or purports to confer a benefit on the third party. Privity of contract has not, however, been abolished. See Practice Note: The Contracts (Rights of Third Parties) Act 1999 in construction contracts. For more information on performance security documents in construction generally, see Practice Note: Performance security in construction.

Contracting parties can, in the drafting of their contract, place limits or restrictions on the rights that are conferred by C(RTP)A 1999 on a third party under their contract. Alternatively, they can contract out of the provisions of C(RTP)A 1999 to avoid any third party rights being conferred at all. See Precedent: Third Party Rights Act clause.

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