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Third Parties - Coggle Diagram

- - - - Claimant argued that, since Dew and Co. had acted as Dunlop’s agent for the purposes of obtaining the undertaking from Selfridge that it would not sell tyres to trade buyers at less than the list price, Dunlop could sue Selfridge on this promise. However, Dunlop was unable to rely on the agency argument, because it was unable to show that it had supplied any consideration to support such a promise.
  - - - Burden can only be assigned with the agreement of the other party - this would be Novation, which, with the agreement of the parties replaces the original contract
    - - For example, in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 (known as the ‘St Martins Property appeal’), the ability to assign without consent was prohibited.
- - - - Alternatively to s1(1)(a) test, 3rd parties will also fall within the act and be able to enforce contractual provisions in their own right where they are expressly identified in the contract and the 'term purports to confer a benefit on that third party' - s1(1)(b)
      - For this test to apply it must be established that the clause or agreement in question was 'intended to confer a benefit' on a 3rd party.
        
        Not enough that an incidental benefit is conferred upon a 3rd party by reason of the necessary operation of the term - Christopher Clarke J made this clear in his application in Dolphin & Maritime & Aviation Services Ltd v Sveriges Angfartygs Assurans Forening, The Swedish Club [2009] EWHC 716 (Comm), [2009] 1 CLC 460, [2009] 2 Lloyd’s Rep 123.
      - The proviso to s. 1(1)(b): s. 1(2)
        
        ‘Subsection (1)(b) does not apply if on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party.’
    - - In a practical sense, the s. 1(1)(b) test will also be limiting because of the s. 1(3) requirement that applies to both limbs of s. 1(1) and requires that the third party be ‘expressly identified in the contract by name, as a member of a class or as answering a particular description’ (emphasis added), although the third party need not be in existence at the time the contract is made.
    - - It appears that any reliance will suffice for this purpose. Thus this section appears to offer generous and effective protection for third parties in this situation—or at least it would offer protection but for s. 2(3).
        
        Section 2(3) expressly allows contracting parties to opt out of this provision by stipulating for a different crystallization test (other than assent or reliance), or by reserving the right to vary or cancel the third party’s right irrespective of reliance or acceptance by the third party.
        
        In accordance with the recommendations of the Law Commission in its 1996 report, there is also a specific judicial discretion to vary or cancel irrespective of reliance or acceptance by the third party in certain circumstances (s. 2(4)–(7) of the Act).