Third party rights
Privity holds that only parties to a contract can enforce it, but the Contracts (Rights of Third Parties) Act 1999 created a major statutory route for third parties to sue. SQE1 tests both the doctrine and the Act's two-limb test.
What "Third party rights" covers
- At common law a third party cannot sue on a contract to which they are not a party, even if it was made for their benefit.
- Under s.1 of the 1999 Act a third party can enforce a term if the contract expressly says so, or if the term purports to confer a benefit on them and there is no contrary intention.
- The third party must be expressly identified by name, class, or description, though need not exist at the time of contracting.
- Under s.2 the parties cannot vary or rescind the term to the third party's detriment once the third party has relied on it or accepted it, unless the contract reserves that right.
- Under s.3 the promisor can raise against the third party any defence arising from the contract that would have been available against the promisee.
- Common-law exceptions to privity include agency, trusts of a promise, assignment, and collateral contracts.
- The promisee retains their own right to sue, and specific performance may be ordered for the third party's benefit (Beswick v Beswick).
Key cases & statutes
The authorities and provisions most likely to matter for this subtopic:
How it's tested in SQE1
SQE1 uses single best answer questions: a short factual scenario, one precise question, and five options of which only one is the best answer on the law applied to the facts. For third party rights, expect to be asked what the correct legal position is, what a party may or must do, or which outcome follows — with more than one option looking arguable. Reading the facts carefully and eliminating the near-misses is the skill that earns the mark.
Where candidates lose marks
- Forgetting the second limb of s.1 requires the term to purport to confer a benefit, rebuttable by contrary intention.
- Assuming the parties can always vary the contract after a third-party right has crystallised under s.2.
- Overlooking that the promisor keeps its contractual defences against the third party under s.3.
Learn this subtopic in the course
A video lesson, notes and exam-style practice on third party rights.
FAQ
Is third party rights tested on SQE1?
Yes — third party rights is part of the SQE1 Contract syllabus (FLK1) and can appear in single best answer questions.
How is third party rights examined in SQE1?
SQE1 tests it by application: you're given a realistic scenario and choose the single best answer from five options. The focus is on using the law correctly, not reciting it — knowing the leading authorities (Dunlop Pneumatic Tyre v Selfridge [1915], Tweddle v Atkinson (1861)) helps.