The following Construction guidance note provides comprehensive and up to date legal information covering:
This Practice Note looks at the key features of the Contracts (Rights of Third Parties) Act 1999 (C(RTP)A 1999), and how third party rights are used in construction contracts. It considers how third party rights are used as an alternative to collateral warranties, the nature of the rights that are actually granted to third parties and how to deal with step-in rights in this context.
The C(RTP)A 1999 came into being following the Law Commission Report: ‘Privity of Contract: Contracts for the benefit of Third Parties’ (1996) which reviewed the doctrine of privity of contract and made recommendations for its reform. The C(RTP)A 1999 came into force in November 1999 and applies to contracts entered into on or after 11 May 2000.
The C(RTP)A 1999 provides an alternative to collateral warranties and, in a construction context, makes it possible to include drafting in building contracts, consultant’s appointments and sub-contracts which confers rights upon third parties who would otherwise have only been able to acquire such rights by virtue of a collateral warranty.
The C(RTP)A 1999 creates an exception to the rule of privity of contract, ie that only the parties to a contract can acquire rights under it or have obligations imposed upon them under it. In general, this rule continues to apply.
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