Cayman To Welcome Third Party Rights Rules

Currently under Cayman Islands law, a person who is not a party to a contractual agreement cannot enforce its terms directly, irrespective of whether the agreement expressly purports to grant to such third party any rights. In other words, strict 'privity of contract' principles apply.

The Contracts (Rights of Third Parties) Law 2014 (Law) has been passed by the Legislative Assembly and will come into force upon approval by the Governor. The Law gives third parties the ability to enforce rights expressly conferred upon them in a contractual agreement. The parties to an agreement can now agree that specified third parties will have a statutory right of direct enforcement of contractual obligations, notwithstanding that such third parties are not a party to the agreement itself.