The Rights of Third Parties Act 1999

This Act fundamentally reforms contract law by allowing 1 (contract) parties to confer 2 (enforce) rights on third parties. For 3 (source), the Act presents a new way of allocating risk in complex deals, and a way to protect the customer in prime and sub-contractor situations. The Act erodes the position of the prime-contractor and 4 (strong) the hand of the sub-contractor.

Before the Act, the doctrine of privity of contract prevented a person who was not a party to a contract from enforcing a term of that contract. This meant that even if a contract affected other people, only the parties to it had rights and 5 (oblige) under it. Until now, the only answer for English law contracts was to create either a complex web of trusts or back-to-back contracts or to allow end-users to call off direct contracts with the 6 (provide).

Ex. 5. Choose the correct word or phrase in italics to complete these sentences from a tenant’s Right of Assignment document.

1. Notwithstanding anything to the contrast / contrary / opposition contained in the lease, Tenant can / may / shall have the following rights with respect to assignment, transfer or sub-lease (referred to / in / as hereinafter as a “Transfer”) of the demised premises.

2. Landlord agrees that it will not unreasonably withdraw / rebut / withhold its approval to any Transfer of the demised premises or any part thereof / thereafter / thereunder, provided such Transfer shall be subject to all of the terms and circumstances / conditions / inclusions of the lease.

3. Tenant shall waive / have / own the right to perform any of the following acts without the necessity to request or obtain Landlord’s refusal / withdrawal / approval therefor.

4. Transfer the demised premises or any portion thereof to / from / at any ‘affiliate company’. An affiliate company shall mean, for purposes of this Article 49, any corporation, partnership or other business entirety / entreaty / entity under common control and ownership with the Tenant, or with the parent or any subsidiary of the Tenant.

Ex. 6. Complete the phrases and sentences below using the correct preposition in the boxes. You may need to consult a dictionary.

A.

against from to (x4) under upon

1. the parties ______ a contract

2. pursuant ______ the contract.

3. to have rights and obligations ______ a contract

4. to benefit ______ the contract.

5. to assign rights or delegate duties ______ a third party

6. enforce a contract ______ someone

7. a third-party beneficiary ______ a contract

8. in reliance ______ the contract

B.

against of on to (x5) under (x2)

1. A party ______ a contract may transfer the rights arising ______ the contract ______ another.

2. Privity of contract refers ______ the fact that only the actual parties ______ a contract should have rights and liabilities ______ the contract.

3. A third-party beneficiary contract is formed when the parties intend ______ confer a benefit ______ a third party.

4. The benefit ______ a contract is an enforceable right ______ the other party.

Ex. 7. Differentiate between assignment and novation using a dictionary. Complete the text below with the words from the box.

assignment (x3), benefits, novation (x4), parties, third party

¹⁾ ______ is a means by which one party to a contract totally removes himself from the contract by transferring not only all of the ²⁾ ______ conferred by that contract, but also all of the obligations. The ³⁾ ______ replaces the original party as a party to the contract. Following ⁴⁾ ______, the other contracting party is left in the same position as he was in before it was carried out, except that there is a new obligor. A ⁵⁾ ______ requires the agreement of all three parties. In contrast, an ⁶⁾ ______ refers to transfer of a right (and sometimes, in general speak, obligations) of one person to another.

⁷⁾ ______differs from novation in that the ⁸⁾ ______ to the contract do not change. Most rights and obligations are capable of ⁹⁾ ______, but not all are capable of ¹⁰⁾ ______.

Ex. 8. These clauses are typically included in a company’s general terms and conditions of sale. Match the clause types with their definitions.

claims and credit, changes or cancellation, delivery, indemnification of vendor, limitation of remedies, orders, prices and payment, retention of title, title and risk, warranties

1. Contains provisions governing the payment of the monetary consideration for the goods. It may include, among other things, terms governing the manner and time of payment, as well as modification of the amounts charged for the goods.

2. Contains, among other things, provisions governing the ownership of the goods and exactly when the peril of loss is shifted from the Vendor.

3. Provides that, despite the fact that the purchaser has taken possession of the goods, the vendor maintains ownership thereof until some condition (usually payment) is fulfilled.

4. Contains provisions governing the manner in which orders for goods are submitted by the buyer and accepted by the vendor.

5. Contains, among other things, provisions regarding the time, limitations and manner of which the sale of the relevant goods becomes complete and final if payment has been made.

6. Contains provisions governing the time and manner of any complaints by the purchaser regarding the goods.

7. Contains, among other things, the terms and conditions governing any express warranties, often including provisions regarding inspection of the goods by the seller and liability, and limitations thereof, of the seller for breach of such warranties. Often matters related to notice of defects and disclaimers are included.

8. Contains provisions restricting the vendor’s legal responsibility to pay damages due to, among other things, errors in the goods and in many cases governing the maximum amount payable by the vendor for such things.

9. Provides that the purchaser guarantees any possible loss the vendor might incur connected with any use of the goods, including violation of any intellectual property rights.

10. Contains provisions governing modifications by the purchaser regarding, among other things, the character or manner in which the goods are manufactured, payment of any expenses related thereto and termination of any orders placed.