The Contracts (Rights of Third Parties) Act 1999

The Supreme Court in Secretary of State for the Department for Environment, Food and Rural Affairs v Public and Commercial Services Union [2024] UKSC 41 held that sections 1(1)(b) and 1(3) of the Contracts (Rights of Third Parties) Act 1999 create a strong but rebuttable presumption that a contract term which purports to confer a benefit on a third party should be legally enforceable by that party. This being the case, contracting parties who wish to avoid conferring a right of action on a third party would be well advised to say so expressly in their contract. While it may be possible to rely on the existence of a chain of contracts to negate the third-party right of action, the mere fact of the existence of a chain of contracts may not always suffice to rebut the strong presumption that is created by a third party who satisfies the requirements of section 1(1)(b) and section 1(3). It is for this reason that express exclusion of the third party right of action may be the safest course to take in order to avoid litigation over whether or not the third party has such a right of action.