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ARTICLE · 17 JUNE 2005

Collateral Warranties - Time For Change?

Addleshaw Goddard
Addleshaw Goddard
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Addleshaw Goddard

Addleshaw Goddard

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The Contracts (Rights of Third Parties) Act 1999 has now been in force over five years. It remains a much under used piece of legislation and its application is still specifically excluded from many property development and construction contracts.

United KingdomLitigation, Mediation & Arbitration
Clive Lovatt
Clive Lovatt

The Contracts (Rights of Third Parties) Act 1999 has now been in force over five years. It remains a much under used piece of legislation and its application is still specifically excluded from many property development and construction contracts. There are a number of reasons why the Act has received a reluctant welcome. There are other and better reasons why that reluctance should be overcome.

Privity of Contract

As is well known, the Act creates an exception to "privity of contract" – the doctrine that generally a contract cannot confer rights or impose obligations on any person save those who are party to the contract - which has long been central to English law. The point was established as long ago as 1861 in Tweddle v. Atkinson and in 1915 the then Lord Chancellor, Viscount Haldane, delivering his judgement in Dunlop Pneumatic Tyre Company Limited v. Selfridge & Co. Limited said:

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