Rights of Third Parties Flashcards
(13 cards)
When can a third party enforce a term under the 1999 Act?
A. Only if they paid fresh consideration
B. Only if the contract is a deed
C. Only if the contract has been registered
D. When the contract expressly provides or purports to confer a benefit on them
D. When the contract expressly provides or purports to confer a benefit on them.
Explanation: Section 1(1) of the Act allows enforcement by a third party if the contract either expressly states they may enforce a term or purports to confer a benefit on them
What is the identification requirement for a third party under s. 1(3)?
A. They must be named individually only
B. They must be named, or identified by class or description
C. They must have given consideration directly
D. They must have signed the contract
B. They must be named, or identified by class or description.
Explanation: Section 1(3) provides that a third party qualifies if identified by name, as a member of a class, or by description
Which event “vests” a third party’s right so the original parties cannot vary or rescind without consent?
A. The third party gives fresh consideration
B. The third party is named in the contract
C. The third party communicates assent, relies on the term, or starts proceedings
D. The contract is made by deed
C. The third party communicates assent, relies on the term, or starts proceedings.
Explanation: Sections 2–3 stipulate that once a third party has assented, relied, or commenced proceedings, their right “vests” and the contract cannot be varied or rescinded without their consent
Can a third party enforce a term that imposes burdens (liabilities) on them under the 1999 Act?
A. Yes, if they expressly assent
B. Yes, if named in the contract
C. No—only benefits can be enforced
D. No—burdens require a separate agreement
D. No—burdens require a separate agreement.
Explanation: The Act only permits enforcement of benefit-conferring terms; liability-imposing (burden) terms lie outside its scope and need their own contract
“This benefit is conferred on all employees of XYZ Ltd.” Unnamed employee Emily seeks to enforce. Under s. 1(3):
A. Yes, if she belongs to that class
B. No—“employees” is too vague
C. No—must be individually named
D. Yes—anyone performing the contract work
A. Yes, if she belongs to that class.
Explanation: A class description suffices under s. 1(3) provided members are ascertainable at time of enforcement
Parties vary the contract after Fiona (third party) has relied on her right without Fiona’s consent. Is the variation effective?
A. Yes—original parties can always vary
B. Yes—if it increases her benefit
C. No—unless Fiona gives fresh consideration
D. No—once relied on, variation needs Fiona’s consent
D. No—once relied on, variation needs Fiona’s consent.
Explanation: Reliance by the third party vests their right, so s. 2–3 bars any variation without their consent
Contract states “Benefit to Charlie,” but Charlie is neither named nor in a class. Can Charlie enforce?
A. Yes—express words are sufficient
B. No—he is not identified by name, class, or description
C. Yes—he can seek to be added by consent
D. No—he must give consideration
B. No—he is not identified by name, class, or description.
Explanation: s. 1(3) requires explicit identification; vague references like “Charlie” without matching the contract’s class/description fail
Diana, acting as Emma’s agent, enters a contract “for the benefit of Frank.” Who can Frank sue under the 1999 Act?
A. Only Diana
B. Both Diana and the principal Emma
C. Only Emma
D. Neither, unless Frank paid consideration
C. Only Emma.
Explanation: The Act creates direct rights against the promisor (Emma); agents (Diana) are not parties for enforcement
A contract confers “all benefits” on a third party but does not specify which term. Can they enforce?
A. Yes—broad purport to benefit is enough
B. No—must relate to an identifiable term
C. Yes—if they show reliance
D. No—benefit must be clearly linked to a contractual term
B. No—must relate to an identifiable term.
Explanation: Enforcement only applies to specific terms that purport to confer benefits; a general statement is insufficient
Contract is mutually rescinded before Gina (third party) assents or relies. Can Gina still enforce?
A. Yes—she can step into the original party’s shoes
B. No—no vesting event occurred
C. Yes—estoppel prevents rescission
D. No—rescission always binds third parties
B. No—no vesting event occurred.
Explanation: Without assent, reliance, or proceedings, Gina’s right never vested under s. 2–3
Which best illustrates a term that “purports to confer a benefit”?
A. “Party A shall pay £1,000 to Party B”
B. “Party A shall indemnify any assignee”
C. “Party A shall not assign rights”
D. “Party A gives notice to Party C”
A. “Party A shall pay £1,000 to Party B.”
Explanation: This directly grants a benefit (payment) to Party B under a contractual term
How do assignment and third-party rights differ?
A. Assignment transfers existing rights; third-party rights create new direct rights
B. Assignment needs consent; third-party rights do not
C. Assignment covers burdens; third-party rights do not
D. Assignment is regulated by the 1999 Act
A. Assignment transfers existing rights; third-party rights create new direct rights.
Explanation: Assignment hands over the original party’s entitlement, whereas the Act gives the third party independent enforcement rights
Which limitation applies under the 1999 Act?
A. Third party may enforce burdens as well as benefits
B. Terms cannot be varied after contract formation
C. Third party cannot enforce obligations to perform services
D. Terms conferring only burdens remain under privity
D. Terms conferring only burdens remain under privity.
Explanation: The Act only extends to benefit-conferring terms; liability-imposing (burden) terms are excluded and remain subject to privity
