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The privity of contract rule means that only the parties to a contract can acquire rights under it or have obligations imposed upon them under it, even if the contract was created to give that party a benefit.
The rule is a key one in English contract law and continues to apply to all contracts where no rights are given under The Contracts (Rights of Third Parties) Act 1999. The Act gives a person who is not party to an agreement the right to enforce a term of that contract in specified circumstances.
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Arbitration and the Contracts (Rights of Third Parties) Act 1999—checklist This Checklist should be read in conjunction with Practice Note: Arbitration and the Contracts (Rights of Third Parties) Act 1999. It lists points to think about when considering whether arbitration agreements in contracts also bind the third party under the Contracts (Rights of Third Parties) Act 1999 (C(RTP)A 1999): • does the contract in question exclude C(RTP)A? Many contracts exclude C(RTP)A 1999 • is the contract governed by English law? If it is not governed by English law, then C(RTP)A 1999 may not apply to the contract • if the contract is not governed by English law, but the arbitration agreement is, then C(RTP)A 1999 might still apply to the arbitration agreement (see eg AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC) • check the date of the contract. The C(RTP)A 1999 does not apply to contracts entered into before 11 May 2000 (C(RTP)A 1999, s 10(2) and Mulchrone v Swiss Life (UK) plc • does...
Drafting and negotiating a payment clause—checklist This Checklist outlines key provisions and issues for consideration when drafting and negotiating a payment clause in a business to business contract including provisions on late payment. For a Precedent payment clause, see Precedent: Payment clause—commercial contracts. For information on late payment, see Practice Notes: Penalty interest rates in commercial contracts and Late Payment of Commercial Debts (Interest) Act 1998, including, in particular: • Late Payment of Commercial Debts (Interest) Act 1998—Contracts, organisations and debts subject to LPCD(I)A 1998 • Late Payment of Commercial Debts (Interest) Act 1998—Calculating the statutory interest • Late Payment of Commercial Debts (Interest) Act 1998—Express terms for late payment in place of statutory interest • Late Payment of Commercial Debts (Interest) Act 1998—Meaning of 'grossly unfair' Price and payment provisions in a contract are often interlinked. When using this checklist, also consider using: Drafting and negotiating a price clause—checklist. Legal Issues General comments What to watch out for Late payment legislation The Late Payment of Commercial Debts (Interest) Act...
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This Practice Note discusses the common law doctrine of privity of contract; the equitable and statutory exceptions to it; how the doctrine affects enforcing a contract against a third party and what happens when, notwithstanding the lack of privity, a contract has an indirect effect on a third party. For guidance on contracts and third parties more generally and on the Contracts (Rights of Third Parties) Act 1999 (C(RTP)A 1999), respectively, see Practice Notes:•Contracts and third party rights•Third party rights—the Contracts (Rights of Third Parties) Act 1999What does privity of contract mean?'Privity of contract' is a common law doctrine, which provides that you cannot either:•enforce the benefit of, or•be liable for any obligation undera contract to which you are not a party.Therefore, at common law, if your client is not a party to a contract (ie they are a third party) then they cannot sue or be sued under that contract.Example:A promises to B that they will pay a sum of money to C—C cannot sue A for that sum...
Enforcement of debt securities Who can enforce? The question of who can bring enforcement proceedings against a bond issuer depends principally on whether the issue of the bonds has been structured with a trustee or a fiscal agent. When a trustee has been appointed, the trustee is generally able to enforce on behalf of the bondholders. When a fiscal agent has been appointed, it is incumbent on the bondholders to enforce their rights against the issuer. The fiscal agent has no role in enforcement. For information on the key parties in a debt capital markets transaction, see Practice Note: Parties in an issue of debt securities. For more information on the different issues that arise based on whether the bond issue is structured using a trustee or a fiscal agent, see Practice Note: Parties in an issue of debt securities—Fiscal agent or trustee. Where the bonds are issued in global, rather than definitive form (as is invariably the case with debt securities issued in the international capital...
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Ireland—EU GDPR—2021 standard contractual clauses (SCCs) for the transfer of personal data to third countries—module one—controller to controller This Precedent contains a template of ‘module one’ of the EU Standard Contractual Clauses (also known as the Model Clauses or SCCs) introduced by Commission Implementing Decision (EU) 2021/914 (the 2021 EU SCCs) for the transfer of personal data from a data controller subject to the EU’s General Data Protection Regulation (EU) 2016/679 (EU GDPR), and which has its only or main establishment in the EU (for the purposes of the EU GDPR) in Ireland, to a data controller outside the EEA that is not subject to the EU GDPR. These SCCs may also be used when the exporting controller is not established in any EU Member State, but is subject to the extra-territorial scope of the EU GDPR and must therefore use the SCCs for transferring in-scope personal data. As the SCCs must be governed by the law of (and be subject to the jurisdiction of) an EU Member State, Ireland...
Notice to Former Tenant or Guarantor of Intention to Recover Fixed Charge (Landlord and Tenant (Covenants) Act 1995, Section 17) Notice to Former Tenant or Guarantor of Intention to Recover Fixed Charge (Landlord and Tenant (Covenants) Act 1995, Section 17) To: [insert full name of tenant or guarantor] of [insert address] Important—the person giving this notice is protecting the right to recover the amount(S) specified from you now or at some time in the future. There may be action which you can take to protect your position. Read the notice and all the notes overleaf carefully. If you are in any doubt about the action you should take, seek advice immediately, for instance from a solicitor or citizens advice bureau. 1 This notice is given under section 17 of the Landlord and Tenant (Covenants) Act 1995 (see Note 1) 2 It relates to [insert address and description of the property] let under a lease dated [insert date] and made between [insert full name of original landlord] and [insert full...
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Where a settlement agreement provides for the employer to make a contribution to the employee’s legal costs, payable direct to the employee’s law firm, can the law firm bring proceedings against the employer if it fails to pay? For information on: • the legal requirements that must be met for a settlement agreement to be binding and valid to settle statutory employment claims, see Practice Note: Settlement agreements in employment—legal requirements • the practical issues that typically arise in relation to a settlement agreement, see Practice Note: Settlement agreements in employment—practical and tax issues Contribution to legal costs A settlement agreement will typically provide for the employer to make a contribution to the employee’s legal costs. For general information on payment of legal fees incurred by an employee in relation to a settlement agreement generally, see the section of Practice Note: Settlement agreements in employment—practical and tax issues entitled ‘Payment for legal advice’. For a sample clause in the settlement agreement dealing with payment of legal fees, see Clause 13.2...
When drafting a consultancy services contract, is it possible for the consultant to add its agent as a third party to the contract entitling the agent to collect payments due to the consultant under the agreement as agent on behalf of the consultant? We do not have a Practice Note which deals with the particular point raised in the question, but you may wish to consider the following. The agency arrangements between the principal (A) and its agent (C) In business matters, the rights and duties of principal and agent (in this case A and C) are normally set out in a written agency agreement. In addition to the matters set out in an agency agreement, the agent also owes the principal duties implied by law and fiduciary duties. In particular, money and other property held for a principal must normally be kept separate from the agent's own property, and all monies received by an agent on a principal's behalf must be paid over or accounted for on request. The...
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Arbitration analysis: This decision arises from Renaissance Securities (Cyprus) Ltd’s (Renaissance) application to vary an anti-suit injunction (ASI) previously granted by the English court in November 2023. The ASI had been granted by the English court to prevent the six defendants in the underlying dispute (the defendants) from proceeding against Renaissance in the Russian courts or any other court or tribunal, in breach of parties’ agreement to arbitrate under the rules of the London Court of International Arbitration (LCIA). Following the ASI in November 2023, the second and sixth defendants (the Minority Defendants) commenced claims in Russia for damages against certain companies affiliated with Renaissance (the RREs), who were not parties to the arbitration agreement between Renaissance and the defendants. In response, Renaissance filed an application at the English court in which the main issue for determination was whether the court had jurisdiction to grant an ASI preventing the defendants from continuing and/or commencing claims against the RREs before the Russian courts. The English court, applying the English rules of...
This week's edition of Commercial weekly highlights includes: publication of the Court of Appeal decision in Eternity Sky Investments Ltd v Zhang which considers the definition of consumer within the meaning of the Consumer Rights Act 2015, publication of the decision in Kulkarni v Gwent Holdings which considers whether a repudiatory breach is capable of remedy, and commentary on VT, UR v Conny GmbH Case C-400/22 which considers the requirement under the EU Consumer Rights Directive that for distance contracts the trader must ensure that when a consumer places their order the consumer explicitly acknowledges that the order implies an obligation to pay.
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