Contract (Third Party Rights) (Scotland) Act 2017

JurisdictionScotland
Citation2017 asp 5


Contract (Third Party Rights) (Scotland) Act 2017

2017 asp 5

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

[30 October 2017]

S-1 Creation of a third-party right

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)

(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)

(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)

(a) was not in existence, or

(b)

(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)

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

(b)

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

S-2 Creation: further provision

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)

(a) the undertaking may be cancelled or modified,

(b)

(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)

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

(b)

(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.

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

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 precludes a contract from providing that an undertaking, which is contained in the contract and in relation to which a third-party right has arisen, will not be cancelled or modified by the contracting parties.

(3) Subsection (1) is subject to sections 4 to 6.

S-4 Protection of third party’s entitlement from retroactive change

4 Protection of third party’s entitlement from retroactive change

(1) No account is to be taken of the cancellation or modification of an undertaking contained in a contract where and in so far as the undertaking is being enforced or otherwise invoked—

(a)

(a) by virtue of a person’s third-party right to do so, and

(b)

(b) in consequence of something happening or not happening prior to the undertaking being cancelled or (as the case may be) the modification being made.

(2) Subsection (1) does not apply in relation to a cancellation or modification if the contract provided that it may be made with retroactive effect.

S-5 Protection of third party’s entitlement after notice given

5 Protection of third party’s entitlement after notice given

(1) Subsection (2) applies (subject to subsections (3) and (4)) where—

(a)

(a) a person who has a third-party right arising from an undertaking contained in a contract is given notice of the undertaking by a contracting party, and

(b)

(b) the undertaking is subsequently cancelled or modified.

(2) No account is to be taken of the cancellation or (as the case may be) modification of the undertaking when it is being enforced or otherwise invoked by virtue of the third-party right.

(3) Subsection (2) does not apply if—

(a)

(a) the undertaking is one which depends on something happening or not happening, and

(b)

(b) it remained uncertain whether that thing would happen or not at the time when the notice mentioned in subsection (1)(a) was given.

(4) Subsection (2) does not apply in relation to the cancellation or modification of the undertaking if—

(a)

(a) at the time when the notice mentioned in subsection (1)(a) was given, the person given the notice was told by the contracting party that the undertaking may be cancelled or (as the case may be) that the modification may be made, or

(b)

(b) the person who has the third-party right has given assent to the cancellation or (as the case may be) modification of the undertaking.

S-6 Protection of third party’s entitlement after undertaking relied on

6 Protection of third party’s entitlement after undertaking relied on

(1) Subsection (2) applies (subject to subsections (3) and (4)) where—

(a)

(a) a person has a third-party right to enforce or otherwise invoke an undertaking contained in a contract,

(b)

(b) the person has done something, or refrained from doing something, in reliance on the undertaking,

(c)

(c) doing or (as the case may be) refraining from doing the thing has affected the person’s position to a material extent,

(d)

(d) either—

(i) the contracting parties acquiesced in the person doing or (as the case may be) refraining from doing the thing, or

(ii) the person’s doing or (as the case may be) refraining from doing the thing in reliance on the undertaking could reasonably have been foreseen by the contracting parties, and

(e)

(e) subsequent to the person doing or (as the case may be) refraining from doing the thing mentioned in paragraph (b), the...

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