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Contracts (Rights of Third Parties) Act 1999

The legislation which governed ‘privity of contract’ has been reformed by the Contracts (Rights of Third Parties) Act 1999. Before this act came into force (May 2000) the only person who could sue the seller for faulty goods/services was the purchaser – the person who actually made the contract. If someone received faulty goods as a present they could not sue the seller.

Under this new legislation certain Third Parties will have the right to sue under someone else’s contract. It may be the situation where someone else is actually named in the contract or where a contract has been taken out for the benefit of a Third Party. Examples of such contracts would be where a person has ordered goods on the Internet to be delivered to someone else, where someone makes a group booking for a holiday or where someone has bought the bride and groom a wedding present from a wedding list in a shop.

Traders and suppliers can protect themselves by expressly excluding Third Party rights, but if they do not exclude such rights then all people who were clearly intended to benefit from the contract potentially have the right to sue for damages if what was provided is not acceptable.