The Essentials of Third Party Rights
For the most part, a contract does not give rights or impose duties on people who are not a signatory to that contract, in other words who are a ‘third party’. However, CRTPA or The Contracts (Rights of Third Parties) Act 1999 can create an exception to this rule.
The Act can be applied to contracts which have been made following the 11th May 2000. The Act allows some third parties to have rights under a contract to which they were not included on. However, that is only the case if the contracting parties intended this when they drew up and signed the contract. The third party can only apply something included in a contract when it specifically allows them to do so and provides a benefit for them.
Not all contracts can be bound by this Act however. For example, it does not apply to contracts for the carriage of goods by rail, road or sea. Nor does it apply to negotiable instruments, company memorandums or articles of association.
For advice about giving rights to third parties read our Your Responsibilities section. Our Rules and Regulations section also has more information about this Act.
More details are available from the Hylton Potts team via email or phone – 0207 381 8111.