CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999: A REMINDER

The Contracts (Rights of Third Parties) Act 1999 is now in force and it applies to contracts entered into on or after 11 May 2000. Whenever a term of a contract purports to confer a benefit on a third party, consideration should be given by the parties to the question of whether or not they intend that third party to have a right of action to enforce or give effect to that right. The parties can make their intention clear either way; that is to say, either to give or refuse the right. A failure to make their intention clear may give rise to expensive litigation at a later point in time (see further our January 2000 issue which is devoted to an analysis of the Act).