Will You Ever solicitors

The cogs of business are oiled by contracts. You make and vary them every day, maybe without intending to or knowing. They are in formal documents drafted by solicitors, on the phone, the back of a fag packet, a restaurant menu, an exchange of e-mails, but contracts they are. All you have to do is agree with someone else that each of you will give something and each will get something. Benefit and detriment, we solicitors say.

Contracts, traditionally, were like marriages, the parties were tied by them but no one else got a look in - until this year.

The Contracts (Rights of Third Parties) Act 1999 came into full force on 11 May 2000.

The Act has 10 sections but the meat is in the first. In essence, if a contract "purports to confer a benefit" on someone who is not named as a party to that contract, he can enforce the benefit: he can sue on the contract.

What does this mean in practical terms?

  • Most tenants of multiple occupation developments, office blocks business or industrial parks have agreements with their landlords in their leases that they will not do anything to disturb the other tenants. Few leases require the landlord to take action under the lease if a neighbouring tenant does just that. If a business nearby parks in your car parks, masks your sign, dumps its rubbish on your premises, the Act may hold the answer for you.
  • If you sell your products through distributors and get a complaint from an end user, you expect your distributor to take care of the problem. It is his customer. Not now. If the customer can fit himself into the ambit of the Act, he may be able to chase you direct and is more likely to do so.
  • You book your business travel through an agent. Your contract is with the agent not the airline. You may be able to sue the airline direct for failures in the service. Experience shows that a disgruntled passenger often gets a better deal from chasing the agent. But how about going after Railtrack direct for train delays?
  • The refurbishment of your premises on a design and build contract has not gone according to plan. The door in now open to get at the design engineer or architect (and his Professional Negligence insurance) for design defects.

The Act, as ever, is woolly in parts and leaves much scope for interpretation and speculation. And watch out, if it works for you, it works for them too. Check your own contracts to see if you can be attacked from another quarter outside the frame of the contract.

Third Party Rights

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