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Lord Renton: My Lords, I always admire lawyers who are zealous--sometimes even when they are over-zealous--in trying to improve the drafting of any Bill that comes before us which deals with the law.

I hope that the noble Lord will forgive me for having missed the first few minutes of his speech. Having considered his amendments, I think that they are contrary to the purpose of the Bill. Certainly, Amendment No. 1 is a complete contradiction of what is set out broadly in the clause. I do not see how the noble and learned Lord the Lord Chancellor could accept it.

Amendment No. 2 does not change things very much; it merely enlarges the concept of the clause.

Amendment No. 3 seems to me completely unnecessary, because if the contract already provides that the third party's right to enforce a term exists, we do not need to have that written into the Bill.

As for Amendment No. 6, I think that it would be regrettable to leave out subsection (6), which is what the noble Lord proposes.

The noble and learned Lord the Lord Chancellor may be more sympathetic than I have been, but I would be rather surprised if he were to accept the amendments.

The Lord Chancellor: My Lords, I am grateful to my noble friend Lord Hacking for the first of his contributions to today's debate. As he knows, and as your Lordships will shortly learn, he has persuaded me of the merits of some of his proposals which he has not yet reached, and I acknowledge his constructive assistance with the Bill. So it is in a way unfortunate that we begin with some of the noble Lord's amendments which I am not persuaded to accept.

I shall speak to Amendments Nos. 1 and 2 together, as it is their combined effect on subsection (4) which concerns us. The subsection currently provides that the right to enforce a contractual term, which is conferred on a third party by subsection (1), is subject to any other

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relevant terms of the contract. The amended subsection would provide that, unless otherwise provided in the contract, the conditions under which the third party had the right to enforce a contractual term were the same as those that would apply if the promisee sought to enforce a term.

As the noble Lord, Lord Renton, pointed out, that would be contrary to the policy behind the Bill, which is to give the third party his own right to enforce the contract, a right which is analogous to, but, subject to Clause 3 on defences and set-offs, independent from the promisee's right of enforcement. It may be that the intention behind the two amendments is not to change the policy of the Bill but to clarify which conditions should apply to the third party's right of enforcement. But I am not persuaded that any such clarification is necessary, and I think that on proper analysis the amendments run counter to the policy of the Bill.

Amendment No. 3 would if accepted insert a new subsection into the clause. The new subsection would explicitly state that contracting parties can provide for the third party's right of enforcement to be subject to limitations and conditions which do not apply to the promisee. As I have just explained, the Bill's intention is to give the third party his own right to enforce the contract in accordance with its terms, and at right is independent of the promisee's right. As a natural progression, the contracting parties should be able to limit or place conditions on the third party's right of enforcement, irrespective of the promisee's rights. It is just a straightforward question of construction of the contract. I believe that subsection (4) makes this absolutely clear as it stands. If I may say so, Amendment No. 3 makes a statement of the obvious--I think this was implicit in what the noble Lord, Lord Renton, said--and is therefore unnecessary.

Amendment No. 6 would delete subsection (6), which is intended to make it clear that the Bill is not just about conferring on third parties positive rights. It also gives them the right as potential defendants to rely on an exclusion or limitation clause which has been included in the contract. The problem of third parties being unable to take advantage of exclusion or limitation clauses is well known, particularly in relation to so-called "Himalaya clauses" in contracts for the carriage of goods by sea.

The policy behind subsection (6) is to make it clear that the Bill will remove this problem. The Bill would, for example, allow a term of a contract which excludes or limits the promisee's liability to the promisor for the tort of negligence and expressly provides that the exclusion or limitation is for the benefit of the promisee's agents, servants or subcontractors and is to be enforceable by those groups. It is my understanding that this amendment is consequential on Amendments Nos. 1 and 2. As I have said, in my view, they are not consistent with the Bill's policy of giving third parties their own benefits and burdens independently of those of the contracting parties.

At rather greater length than the noble Lord, Lord Renton, expressed the matter, I entirely agree with the noble Lord: the critical point is that there is no

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principle or presumption of sameness. It is a question of construction of the contract in every case. I therefore cannot accept amendments to subsection (4), and so I am of the view that subsection (6) remains necessary as it stands.

Lord Hacking: My Lords, I am very grateful to all noble Lords who have participated in the debate on these amendments. I am disappointed that I received no support from any quarter. I am particularly disappointed that I did not receive support from the noble Lord, Lord Renton. I have been for years an apostle of his efforts since he was chairman of the committee on having our statutes written with greater clarity and with less obscurity. Failing even to get the support of the noble Lord, I think that the right thing for me to do is to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 2 and 3 not moved.]

Lord Hacking moved Amendment No. 4:


Page 1, line 21, after ("any") insert ("substantive")

The noble Lord said: My Lords, I promised that I would be able to take later amendments briefly. This amendment deals with a small but important point. We now come to subsection (5), dealing with remedies available to a third party. Clearly, the remedy should be a substantive remedy; that is, the right to recover damages. It should not be a procedural remedy. For that reason, it would improve the Bill to include "substantive" before "remedy". I beg to move.

Lord Renton: My Lords, before the noble Lord sits down, could he assist your Lordships by giving an example of a remedy which is not substantive?

Lord Hacking: My Lords, there are a number of procedural remedies available during the course of a case. The White Book might not be thrown out of the window, but the law is crammed with minor remedies that are available. It is clearly not intended that a third party should have a procedural remedy available to him. As to giving exact examples, I will write to the noble Lord, and I can fill my letter with pages of examples from the White Book.

The Lord Chancellor: My Lords, the purpose of subsection (5) is that the third party should have the right to pursue the same remedies as would have been available to him if he had been a party to the contract. My noble friend Lord Hacking argues that his amendment is intended to ensure that the third party would have the right to pursue a substantive remedy, such as a remedy in damages. I believe that as drafted the subsection would have exactly that effect and that the amendment is not necessary.

The proposed wording suggests--and I think that this is the matter as regards which the noble Lord, Lord Renton, was inviting further explanation--a categorisation of remedies into substantive remedies, to which the subsection would apply, and some

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unspecified category which would be excluded. That is not a recognised categorisation. So, far from enhancing clarity, the amendment would be likely to introduce an element of confusion. Subsection (5) of Clause 1 as it stands applies to all remedies available at law or in equity. To add the word "substantive" runs the risk that it would be confused as meaning that remedies which might be defined as "procedural"--for example, an injunction or a declaration--were not available whereas the intention is that all remedies should be available.

Noon

Lord Hacking: My Lords, I have made my point. I think the answer is to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hacking moved Amendment No. 5:


Page 1, line 23, after second ("to") insert ("remoteness and mitigation of")

The noble Lord said: My Lords, Amendment No. 5 stands on its own. I look rather carefully towards the noble Lord, Lord Renton, because I really am trying to be his apostle and improve the drafting of the Bill. Indeed, I can pray in aid paragraph 33.33(iii) of the Law Commission's report. The paragraph makes it plain that if a third party is entitled to damages he cannot,


    "recover loss that is too remote and he is under a duty to mitigate loss". My amendment seeks to express that plainly and squarely on the face of the statute. It is a clarifying amendment. I still hope that I might have a little support from the noble Lord, Lord Renton. I beg to move.


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