A Birthday Present for Lord Denning: The Contracts (Rights of Third Parties) Act 1999

Abstract

The new century brings a new approach to the privity rule in English contract law. The Contracts (Rights of Third Parties) Act 1999 received royal assent on 11 November 1999 and came into force on 11 May 2000.1 The Act, with some modifications, implements the changes recommended in the Law Commission's 1996 Report.2 Legislative change of the privity rule has taken a long time and follows decades of judicial and academic criticism.3 When the Contracts ( Rights of Third Parties) Bill was read for a second time in the House of Lords,4 Lord Meston offered it to Lord Denning as a hundredth birthday present. The Act befits the late Lord Denning, for it was he who consistently questioned the existence of the privity rule in English contract law.5 According to his analysis, the common law recognised the right of a person to sue upon a contract where the person was not a party to the contract, provided that the contract was made expressly for the benefit of the third person and that it was intended to be enforceable by the third person.6 The Act now allows what Lord Denning considered possible over half a century ago. While the birthday present is not quite the right size (the Act does not abolish the privity rule but merely reforms it in certain circumstances) it would have suited Lord Denning's purposes in a number of contract cases. A few examples from past cases serve to illustrate this point. In the case of Beswick v Beswick,7 there would have been no need to resort to allowing the