A contract may now be made to confer a benefit on another person, according to the Contracts (Right of Third Parties) Act 1999. However, common law suggests that third parties may not enforce a contract which confers a benefit upon them. It is common ground between the two systems however that obligations may not be imposed upon third parties to contract.
Historically, in the case of Tweddle v Atkinson , the common law privity rule was noted. A groom could not enforce a contract made between his father and the bride’s father to pay the groom some money, as consideration did not move from the groom. The third party to the contract, the groom, could not enforce the contract.
This was again confirmed in Beswick v Beswick  where an aunt could not enforce a contract made between her husband and nephew for the nephew to pay the aunt £5 per week after the husband died (though the husband’s estate’s claim succeeded). Finally, in Dunlop v Selfridge , Dunlop could not enforce a term in a contract with a distributor with the ultimate retailer of their tyres to be sold at list price or above only.
Lord Denning’s anarchy
In Jackson v Horizon Holidays , Lord Denning attempted to allow recovery of benefits assigned to third parties of a contract. In this case, the purchaser of a package holiday (Jackson) was allowed to recover for his loss and the loss of benefit to his family for the holiday being of unsatisfactory holiday...
To continue reading, purchase access to all Contract Law notes (£5)
2) Purchase access (£5)
Already purchased? Login with Facebook.