Privity of Contract Under Section 56 (1) of the Law of Property Act, 1925
| Published date | 01 July 1963 |
| Author | E. P. Ellinger |
| Date | 01 July 1963 |
| DOI | http://doi.org/10.1111/j.1468-2230.1963.tb00721.x |
PRIVITY
OF
CONTRACT
IJNDER
SECTION
56
(1)
OF
THE
LAW
OF
PROPERTY
ACT,
1925
MUCH
attention has been drawn to section 56
(1)
of the Law of
Property Act, 1925.l
It
is
discussed in various textbooks and
in
several recent articles.5 Yet, the section’s interpretation
is
still
not
free
from doubt. It is
still
unsettled which persons can avail
themselves
of
this section.
In
this article an attempt
will
be made
to solve the difficulties and to show who can claim under section 56.
“56.-(1) A
person
may take an immediate
or
other
interest
in
land
or
other property,
or
the benefit of any
con-
dition,
right of entry, covenant
or
agreement over
or
respecting
land
or
other property, although he may not be named as a
party
to the conveyance
or
other instrument.”
Actually this section
is
a wide reenactment of section
5
of
the
Real Property Act,
1845,‘
which reads:
“That under an indenture
.
.
.
an immediate estate
or
interest,
in
any tenements
or
hereditaments, and the benefit
of a condition
or
covenant, respecting any tenements
or
hereditaments, may be taken, although the taker thereof
be
not named
a
party to the same indenture.
. . .
A
comparison of these two sections shows that the
1925
Section
Section
The section itself reads:
YY
legislation has widened the scope of the earlier enactment.
5
applies
only
to contracts under seal concerning land.
56
applies to contracts respecting
cc
land
or
other property
”
1.
15
it
16
Geo.
5,
c.
20.
2
Chitty
on
Contracts
(31st
ed.,
1955),
p.
64;
Anson’a
Principles of the English
Law
of Contract
(21st
ed.,
1959).
pp.
357459;
Cheshire and Fifoot,
The
Law
of Contract
(5th
ed.,
1960),
pp.
375377;
Pollock,
The Principles
of
Contract8
(13th ed.,
1950).
p.
168;
Leake,
Principles
pj
the Law
of
Contract
(8th ed.,
1931),
p.
310;
Salmond and Williams,
Principles
of
the
Law
of
Contracts
(2nd ed.,
1945).
p.
384.
a
Elliot,
“
The effect
of
Section
56 (1)
of
the Law
of
Propyty Act,
1925
”
(1956)
20
Conv.(x.s.)
43:&114;
Andrews,
’‘
Section
56
Revisited
(1959) 03
CO~V.(N.S.)
179;
Furmston,
Return
to
Dunlop
v.
Selfridge
?”
(1960) 23
M.L.R.
373.
4
8
&
9
Vict. c.
106.
5
8.
56
appliee to all kinds
of
property. See Crossman
J.
in
Re
Fososter
(1938)
159
L.T.
279
at p.
‘282.
An
attempt
to
interpret the worda “other proper,t,y
”
ejusdem generis
with
”
land
”
must
fail.
In
the first place “property
is
defined,in
8.
205
(xx)
of
the Law of Property Act,
1925.
In
the second place
*‘
land
is
defined in
8.
205
(ix)
of
the Law
of
Property Ac!,
as
including
a!!
rights
over land.
Thus
an
interpretation
ejusden generis
of
would render that expression
superfluous,
since everything that
can
he reaarde?
as
ejusdem generis
to land
L,
per
8.
205
(ix), included
in
the definit?on
of
’‘
land.”
other property
396
JULY
1963
PRIVITY
OF
CONTRACT
397
whether by deed
or
not. The old section referred to
“
immediate
estate
or
interest.” The new section mentions
“
immediate
or
other
interest.” In other respects the sections are
in pari matena.
Thus the question of the persons who can avail themselves of the
section should be decided in the same manner in respect of both
sections.
The problem
in
issue is the exact scope of section
56
(1).
One
principle only seems to be free from doubt. A third party can
never enforce a contract which was not expressly made for his
benefit. The contractors must have the intention
of
conferring a
right
on
the third party
or
to purport to make a contract with
him. This follows from
White
v.
Bijou
Mansions,
LtdT
and
is
common ground.
This, unfortunately, is where certainty ends and controversy
begins. From the words of the section itself one would assume
that
it
enacts a
jus
tertii, i.e.,
that the section lays down that any
man who is named as a beneficiary in a contract respecting property
may enforce
it.
This, however, is not the accepted interpretation
of
the section.
It
is said that section
56
does not assist every
person who is mentioned as
a
beneficiary in a contract. In
order to avail himself
of
section
56
the
third
party must-it
is
said s-have a sufficient interest,
or
an independent right.
Thus
formulated, the interpretation leads
to
a
vague rule.
For
what
is a sufficient interest
or
an independent right? One can say that
a
sufficient interest
or
independent right is only a
perfect
legal
right which the third party has against the defendant
to
the action. Such
a
construction would render the section super-
fluous.
If
the third party has a perfect legal right against any
person, he can bring an action against this
person
without relying
on
section
56
(1).
If
one says that a sufficient interest is something
short of a perfect legal right then the term is simply vague.
Almost everything can be
“
something short of a legal right.”
An
attempt will be made to clarify this vague terminology in
the course of this article.
It
will be shown that section
56
applies
primarily to certain kinds of persons. The relevant question in
each case is not
so
much the nature of the third party’s right over
the property-the subject matter-of the contract, but the nature
of the relationship between the third party and the contractors.
The mere fact that the contractors intend to confer a right
on
the third party
wilI
not in itself suffice. The third party must
have an independent interest
or
a beneficial title in the subject-
matter of the contract. Such a title,
it
will
be shown, can
arise
from the relationship between the third party and one of the
6
This
difference should
be
recolled when discussing
Kelsey
v.
Dodd
(1883)
7
[1937]
Ch. 610.
See
note
a,
supra.
52
L.J.Ch.
34,
injra.
This
seems
to be the
opinion
of
most
textbook
writers.
To continue reading
Request your trial