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Hong Kong Law Reform Commission |
(This table tabulates the current rules in the
legislative schemes reforming the privity doctrine in
Australia,
England and Wales, New Zealand and Singapore.)
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Queensland
(the 1974 Act)
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Northern Territory
(the 2000 Act)
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Western Australia
(the 1969 Act)
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England and Wales
(the 1999 Act)
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New Zealand
(the 1982 Act)
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Singapore
(the 2001 Act)
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Who is a third party (TP)?
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person other than the promisor (p’or) and promisee
(p’ee);
includes a person who at the time of acceptance is identified and in
existence, albeit not having been identified or in existence at the time when
the promise was given;
“acceptance” is defined
(s 55(6))
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same as Queensland (s56(6))
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person not named as a party to the contract (s11(2))
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expressly identified in the contract by name, as a member of a class or
as answering a particular description;
need not be in existence when the contract is entered into
(s1(3))
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designated by name, description, or reference to a class;
not a party to the contract (whether or not in existence at the time when
contract is made)
(s 4)
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same as England (s2(3))
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What is the test of enforceability?
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a promise (a) which is or appears to be intended to be legally binding;
and (b) which creates or appears to be intended to create a duty enforceable by
a beneficiary (“B”);
whether made by deed, or in writing, or, orally, or party in writing and
partly orally (s55(6));
consequences:
upon acceptance, B is bound by the promise and subject to the duties in the
promise (s55(3)(b-d));
remedies to B: as may be just and convenient for the enforcement
(s55(3)(a))
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same as Queensland but a promise is a promise in writing (s56(6);
s56(3)(b-d) and s56(3)(a))
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contract expressly purports to confer a benefit directly on TP
(s11(2));
consequences:
p’or can enforce against TP obligations imposed on TP (s11(2)(c))
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(a) contract expressly provides that TP may enforce the contract; or
(b) contractual term purports to confer a benefit on TP, subject to
parties’ intention on a proper construction of the contract
(s1(1)-(2));
consequences:
TP’s enforcement of the promise is subject to other relevant terms of
the contract (s1(4));
remedies available to TP as if he had been a party to the contract
(s1(5));
where a contract term excludes or limits liability, references to
TP’s enforcement of the term = references to his availing himself of the
exclusion or limitation (s1(6))
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contract confers, or purports to confer, a benefit on B, subject to
parties’ intention on a proper construction of the contract (s4);
consequences:
remedies available to B as if he were a party to the contract (s8)
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same as England (s2(1),(2)(4) to (6))
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Can contracting parties vary or rescind the contract?
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prior to acceptance, parties may, without the consent of B, vary or
discharge the promise s55(2)
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same as Queensland s56(2)
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parties can, with mutual consent, cancel or modify the contract before
TP has adopted it either expressly or by conduct (s11(3))
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parties cannot rescind or vary the contract where
(a) TP has communicated his assent to the p’or;
(b) p’or aware that TP has relied on the contractual term, or
(c) p’or can reasonably be expected to have foreseen that TP would
rely on the term and TP has in fact relied on it (s2(1));
“assent” can be by words or conduct; postal rule not
applicable (s2(2))
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parties cannot vary or discharge the promise where
(a) B’s position has been materially altered by his or
another’s reliance on the promise (whether or not B or that another knows
the precise terms of the promise); or
(b) B has obtained against p’or judgment or an arbitrator’s
award on the promise (s5)
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same as England (whether or not TP knows the precise terms of the
promise) (s3(1))
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Can contracting parties vary or rescind the contract after
crystallisation, or lay down their own crystallisation test?
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NA
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NA
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NA
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parties may expressly provide that:
(a) they can, by agreement, rescind or vary the contract without TP’s
consent;
(b) TP's consent to rescission or variation is required in circumstances
other than those specified in the Act
(s2(3))
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if the contract expressly provides that parties can vary or discharge a
contract and B knows of the provision before materially altering his position in
reliance on the promise, any contracting party can do so according to that
provision
(s6)
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same as England (s3(3))
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Should there be any judicial discretion to authorise variation or
cancellation?
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NA
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NA
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NA
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the court may, upon the parties’ application, dispense with
TP’s consent[224] where his
consent cannot be obtained because his whereabouts cannot reasonably be
ascertained, or where he is mentally incapable of giving his consent
(s2(4));
where consent is required under s2(1)(c), the court may dispense with the
consent if the consent cannot reasonably be ascertained whether or not there is
TP’s reliance (s2(5));
the court can impose such conditions, including compensation to TP, as it
thinks fit (s2(6));
arbitral tribunals have the same discretion
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where variation or discharge of a promise is
precluded[225] or it is uncertain
whether the variation or discharge is so precluded, the court may, on either
party’s application, authorise the variation or discharge, if it is just
and practicable to do so (s7(1));
where B has suffered damage as a result of the reliance upon the promise,
the court shall impose a condition that p’or is to compensate B
(s7(2))
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same as England (s3(4)-(6))
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Should consideration be an issue?
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for a valuable consideration moving from the p’ee, p’or is
under a duty to perform the promise (s55(1));
relief to B shall not be refused solely because, as against p’or, B
is a volunteer (s55(3)(a))
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same as Queensland (s56(1) & (3)(a))
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NA[226]
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NA. The Law Commission believes that no separate provision is
needed.
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relief to B will not be refused solely because, as against p’or, B
is a volunteer (s8)
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s2(5)
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What defences, set-offs and counterclaims should be available to
promisors?
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subject to the parties’ intention, any matter which in proceedings
not brought under s55:
(a) would render a promise void, voidable or unenforceable, whether wholly
or in part; or
(b) is available by way of defence to enforcement of a promissory duty
arising from a promise
would, in like manner and to the like extent, render the promise void,
voidable or unenforceable, or be available as defence to p’or under
s55
(s55(4))
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same as Queensland (s56(4))
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all defences that would have been available to p’or had TP in an
action to enforce the contract been named as a party to it, will be so available
to the p’or (s11(2)(a))
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defence or set-off, arising from or in connection with the contract as
well as relevant to the term enforced, that would have been available to
p’or had the proceedings been brought by p’ee(s3(2));
parties can agree to broaden the scope of defences and set-offs available
to p’or(s3(3));
p’or can raise defences, set-offs and counterclaims (only those not
arising from the contract) that are specific to TP only(s3(4));
defences, set-offs and counterclaims can be narrowed down by an express
term in the contract (s3(5));
TP cannot enforce an exclusion clause if he could not have done so had he
been a party to the contract (s3(6));
s2(2) of the Unfair Contract Terms Act not apply (s7(2))
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by way of defences, counterclaims, set-offs, any matter which would have
been available
(a) if B had been a party to the contract; or
(b) if (i) B were the p’ee; and (ii) the promise had been made for
the p’ee’s benefit; and (iii) the proceedings had been brought by
the p’ee (s9(2));
subject-matter of the set-off or counterclaim should arise out of or in
connection with the contract (s9(3));
B not liable on a counterclaim, unless he has full knowledge of the
counterclaim, and the counterclaim should not exceed the value of the benefit
conferred on him (s9(4))
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same as England (s4) and (s8(2))
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How should overlapping claims against promisors be dealt
with?
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any right or remedy which exists or is available apart from s55 is not
affected (s55(7))
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same as Queensland (s56(7))
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each party of the contract to be joined as a party to the action brought
by TP (s11(2)(b))
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the fact that TP been given rights does not affect the
p’ee’s rights to enforce the contract (s4);
if p’ee recovered from p’or a sum representing (a) TP's loss in
respect of the term; or (b) the expense to the p’ee of making good to the
TP the p’or default; the court or arbitral tribunal shall in any
subsequent proceedings by TP reduce an award to him so as to take account of the
amount already recovered by the p’ee (s5)
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any right or remedy which exists or is available apart from this Act is
not affected (s14(1)(a))
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same as England (s5 and s6)
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Should arbitration clauses and exclusive jurisdiction clauses be
binding on third parties?
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NA
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NA
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NA
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where a contract term confers a benefit on TP (the substantive term) and
the enforcement of it is subject to a written arbitration clause, TP be treated
as a party to that clause as regards the dispute between p’or and TP
relating to the enforcement of the substantive term (s8(1));
where TP can enforce under s1 a contract term providing for the dispute
between p’or and him to be submitted to arbitration (the Agreement), TP,
if he so enforces, will be treated as a party to the Agreement, provided that he
is not so treated under s8(1) (s8(2))
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NA
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same as England (s9)
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What should the scope of the present reform be?
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TP’s existing rights are preserved (s55(7))
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same as Queensland (s56(7))
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NA
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any right or remedy of TP that exists or is available apart from the Act
is not affected (s7(1));
the Act does not apply to various
areas[227] (s6)
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the Act does not limit or affect:
(a) any right or remedy of B that exists or is available apart from the
Act;
(b) the law of agency and law of trusts;
(c) Contracts Enforcement Act 1956 or any other enactment that requires any
contract to be in writing or to be evidenced by writing; or
(d) s49A of the Property Law Act 1952 (requiring that interest in land can
only be created or disposed of by writing)
(s14)
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same as England (s8 (1) & s7)
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Miscellaneous issues
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NA
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NA
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NA
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action brought by TP is within s5 and s8 of the Limitation Act 1980
(s7(3));
TP not to be treated as a party to the contract for other enactments
(s7(4))
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the Act does not apply to any promise not governed by New Zealand law
(s13A)
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same as England (s8 (3) and (4))
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