People who are not parties to a contract can sue on it in two situations;

  • The contract expressly provides that they may do so; or
  • The contract purports to confer a benefit upon them, unless it is clear that the term was not intended to be enforced by the third party.

Express provision in the contract

This is where statute gives third parties a right to enforce the contract if the contract expressly provides that he may. Therefore, this enables the contracting parties to provide expressly for a third party to be able to enforce a term of the contract.

The contract purports to confer a benefit

This applies when the term of the contract purports to confer a benefit on the third party. The aspect of benefit under such circumstances can include any performance due under the contract, such as a payment of money, a transfer of property, the rendering of a service, or the benefit of an exemption or limitation clause. The term must, moreover, purport to confer the benefit on the third party, so that it is not enough for third parties to show that they would happen to benefit from its performance.

Identifying the third party

It is not necessary for the third party to be specifically named: it is sufficient for him or her to be expressly identified in the contract by name, as a member of a class or as answering a particular description. Therefore, the phrases such as successors in title, future owners and occupiers will be capable of conferring rights of enforcement upon these people in appropriate circumstances. Nor need the person to be in existence at the time of the contract: rights could be conferred on a company, which is yet to be incorporated, an unborn child or a future spouse.

Consent to variations

Under this principle, unless a contract provides otherwise, the parties to the contract may not rescind the contract, or vary it so as to extinguish or alter the third party’s rights, without his or her consent if the third party has either:

  • Communicated to the promisor their assent to the relevant term;
  • Relied on the term and the promisor knows of that reliance; or
  • Relied on the term and the promisor can reasonably be expected to have foreseen that reliance.

If one of these three situations applies, then any variations or cancellation can only take place with the consent of the third party.

The need for consent to variations can be dispensed with by the court if the third party cannot be traced or is incapable of giving consent, and if this occurs the court can order compensation to be paid to the third party.


Third parties have the same remedies as would be available to them if they were contracting parties, including the rights to damages and specific performance. Although the contract can be enforceable by the promisee as well as the third party, there cannot be double liability for the promisor.


In an action by the third party, the promisor is able to rely on any defence arising out of the contract which would have been available to him or her had the claim been by the promisee. Thus, if the promisee induced the promise by misrepresentation or duress, the promisor can use that as a defence to an action by the third party.


The Married Women’s Property Act 1882 provides that where a husband or wife takes out a life insurance policy for the benefit of their spouse or children, the contract can be enforced by the beneficiary.

Under a third party insurance policy, where a person incurs liability to another, and is covered for that liability by an insurance policy, the other person can, in certain circumstances, claim on the policy.

Bills of exchange

A third party and sue the giver of a bounce cheque even if he did not have a direct contract with the giver.

Scroll to Top