Contracts (Rights of Third Parties) Bill [H.L.] - continued        House of Lords

back to previous text
 
Protection of promisor from double liability.     5. Where under section 1 a term of a contract is enforceable by a third party, and the promisee has recovered from the promisor a sum in respect of-
 
 
    (a) the third party's loss in respect of the term, or
 
    (b) the expense to the promisee of making good to the third party the default of the promisor,
  then, in any proceedings brought in reliance on that section by the third party, the court or arbitral tribunal shall reduce any award to the third party to such extent as it thinks appropriate to take account of the sum recovered by the promisee.
 
Exceptions.     6. - (1) Section 1 confers no rights on a third party in the case of a contract on a bill of exchange, promissory note or other negotiable instrument.
 
      (2) Section 1 confers no rights on a third party in the case of any contract binding on a company and its members under section 14 of the Companies Act 1985.
 
      (3) Section 1 confers no right on a third party to enforce-
 
 
    (a) any term of a contract of employment against an employee,
 
    (b) any term of a worker's contract against a worker (including a home worker), or
 
    (c) any term of a relevant contract against an agency worker.
      (4) In subsection (3)-
 
 
    (a) "contract of employment", "employee", "worker's contract", and "worker" have the meaning given by section 54 of the National Minimum Wage Act 1998,
 
    (b) "home worker" has the meaning given by section 35(2) of that Act,
 
    (c) "agency worker" has the same meaning as in section 34(1) of that Act, and
 
    (d) "relevant contract" means a contract entered into, in a case where section 34 of that Act applies, by the agency worker as respects work falling within subsection (1)(a) of that section.
      (5) Section 1 confers no rights on a third party in the case of-
 
 
    (a) a contract for the carriage of goods by sea, or
 
    (b) a contract for the carriage of goods by rail or road, or for the carriage of cargo by air, which is subject to the rules of the appropriate international transport convention,
  except that a third party may in reliance on that section avail himself of an exclusion or limitation of liability in such a contract.
 
      (6) In subsection (5) "contract for the carriage of goods by sea" means a contract of carriage-
 
 
    (a) contained in or evidenced by a bill of lading, sea waybill or a corresponding electronic transaction, or
 
    (b) under or for the purposes of which there is given an undertaking which is contained in a ship's delivery order or a corresponding electronic transaction.
      (7) For the purposes of subsection (6)-
 
 
    (a) "bill of lading", "sea waybill" and "ship's delivery order" have the same meaning as in the Carriage of Goods by Sea Act 1992, and
 
    (b) a corresponding electronic transaction is a transaction within section 1(5) of that Act which corresponds to the issue, indorsement, delivery or transfer of a bill of lading, sea waybill or ship's delivery order.
      (8) In subsection (5) "the appropriate international transport convention" means-
 
 
    (a) in relation to a contract for the carriage of goods by rail, the Convention which has the force of law in the United Kingdom under section 1 of the International Transport Conventions Act 1983,
 
    (b) in relation to a contract for the carriage of goods by road, the Convention which has the force of law in the United Kingdom under section 1 of the Carriage of Goods by Road Act 1965, and
 
    (c) in relation to a contract for the carriage of cargo by air-
 
      (i) the Convention which has the force of law in the United Kingdom under section 1 of the Carriage by Air Act 1961, or
 
      (ii) the Convention which has the force of law under section 1 of the Carriage by Air (Supplementary Provisions) Act 1962, or
 
      (iii) either of the amended Conventions set out in Part B of Schedule 2 to the Carriage by Air Acts (Application of Provisions) Order 1967.
Supplementary provisions relating to third party.     7. - (1) Section 1 does not affect any right or remedy of a third party that exists or is available apart from this Act.
 
      (2) Section 2(2) of the Unfair Contract Terms Act 1977 (restriction on exclusion etc. of liability for negligence) shall not apply where the negligence consists of the breach of an obligation arising from a term of a contract and the person seeking to enforce it is a third party acting in reliance on section 1.
 
      (3) In sections 5 and 8 of the Limitation Act 1980 the references to an action founded on a simple contract and an action upon a specialty shall respectively include references to an action brought in reliance on section 1 relating to a simple contract and an action brought in reliance on that section relating to a specialty.
 
      (4) Where-
 
 
    (a) a third party has a right under section 1 to enforce a term that disputes between himself and the promisor are to be submitted to arbitration, and
 
    (b) the term is an agreement in writing for the purposes of Part I of the Arbitration Act 1996,
  then, as regards any matter which the third party requires to be referred to arbitration in exercise of the right, Part I of the Arbitration Act 1996 has effect as if the right were under an arbitration agreement in writing (within the meaning of that Part of that Act) between the third party and the promisor.
 
      (5) A third party shall not, by virtue of section 1(5) or 3(4) or (6), be treated as a party to the contract for the purposes of any other Act (or any instrument made under any other Act).
 
Short title, commencement and extent.     8. - (1) This Act may be cited as the Contracts (Rights of Third Parties) Act 1999.
 
      (2) This Act comes into force on the day on which it is passed but, subject to subsection (3), does not apply in relation to a contract entered into before the end of the period of six months beginning with that day.
 
      (3) The restriction in subsection (2) does not apply in relation to a contract which-
 
 
    (a) is entered into on or after the day on which this Act is passed, and
 
    (b) expressly provides for the application of this Act.
      (4) This Act extends to England and Wales only.
 
 
previous section contents
 
House of Lords home page Houses of Parliament home page House of Commons home page search page enquiries

© Parliamentary copyright 1999
Prepared 28 May 1999