These devices clearly reveal the courts dissatisfaction with the rule yet none in the end was wholly satisfactory. Statutory reform as clearly the better answer.
The Law Reform agencies
1937 Law Revision Committee recommended that a third party who is, in express terms, stated to be entitled to be a beneficiary under a contract should be able to enforce that benefit. This was ignored up until the 1999 Act.
1991 and 1996 The Law commission reconsidered the issue. Their view was that tinkering with e exceptions or setting out a general principle to be fleshed out by the courts would not lead to satisfactory reform. The solution should be statuary.
The Contacts (Rights of Third parties) Act 1999
This allows third parties to enforce a benefit but lays down some conditions
S.1 (1)(a) The contract must actually say that the benefit is intended for the third party.
S.1 (1)(b) It must be clear that this is what the contract meant.
S.1 (2) The parties to the contract must have intended the benefit to be enforceable by the third party.
S.1 (3) The third party must be identified in the contract by name, or description, or as a member of a group but need not be in existence when the contract is made.
Effect of the Act
· it should prevent injustice to third party beneficiaries
· It should lessen the need for the courts to stretch other legal principles (e.g. trusts and collateral contracts) to avoid its constraints
· It will bring English law into line with many other countries
· It rightly does not do away with the rule of privity
- common law rules remain to stop third parties having obligations imposed upon them against their free will.
- A third part cannot claim a benefit where one was not originally intended
· The doctrine is now in a state recommended for so long by law reform bodies, the judiciary and legal academics.