Date: Fri, 21 Nov 2003 13:34:30

From: Andrew Tettenborn

Subject: Privity

Four years in, we at last have a case on our English anti-privity law, the Contracts (Rights of Third Parties) Act 1999.

Contract buffs will remember Les Affreteurs Reunis SA v. Leopold Walford (London) Ltd [1919] AC 801, where a charterparty provided for payment of commission to a broker and the broker successfully sued on the basis that the benefit of the promise was trusted to him. Appropriately enough, Nisshin Shipping v Cleaves [2003] EWHC 2602 (Comm) involved exactly this situation. Colman J held the Act applied: the contract was silent, & s.1 only denied the third party a right to sue if there was a positive indication that he wasn't to have rights. So the broker could enforce in his own name.

Colman went on to hold that because there was a clause requiring all disputes under the agreement to be arbitrated, the brokers were to be regarded as parties to that clause under s.8, even though the clause - having been drafted before the 1999 Act - only referred in its mechanics to owners and charterers.

Straightforward and absolutely sound, as we might have expected from Colman. But still noteworthy. The fact that it took four years to have the Act in court looks like an indication that we got the drafting just about right.

Andrew

Andrew Tettenborn MA LLB
Bracton Professor of Law

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