Privity of Contract and Third Party Beneficiaries 2007



FOOTNOTES

* Special thanks to Prof. Nicholas Rafferty, University of Calgary, Faculty of Law, who provided comments on an earlier draft of this paper.


[1]. London Drugs v. Kuehne & Nagel Investments [1992] 3 S.C.R. 299 [London Drugs]; Fraser River Pile & Dredge v. Can-Dive Services Ltd. [1999] 3 S.C.R. 108 [Fraser River].

2 Joseph Chitty, Chitty on Contracts, 29th ed. (London: Sweet & Maxwell, 2004) at 1075, para. 18-003.

[3]. Ibid. at 1073, para. 18-001.

[4]. David Percy, Privity of Contract: The Final Siege of the Citadel(Paper presented April 2000) at 3 [unpublished].

[5]. S.M. Waddams, The Law of Contracts, 5th ed. (Aurora: Canada Law Book, 2005) at 193.

[6]. (1861) 121 E.R. 762 (Q.B.)

[7]. [1915] A.C. 847 (H.L.).

[8]. [1968] A.C. 58 (H.L).

[9]. Examples derived from the Law Reform Commission of Hong Kong Privity of Contract Sub-Committee, Consultation Paper, Privity of Contract (Wanchai: The Commission, 2004), online: The Law Reform Commission of Hong Kong <http://www.hkreform.gov.hk> at 5-6 [Hong Kong Report].

[10]. London Drugs, supra note 1at para. 208.

[11]. Organization and headings for this section based on Hong Kong Report, supra note 9 at 14-20.

[12]. Robert Stevens, “The Contracts (Rights of Third Parties) Act 1999" (2004) 120 L.Q.R. 292 at 320-322 [Stevens]; Hong Kong Report, supra note 9 at 14; Law Commission of England and Wales, “Privity of Contract: Contracts for the Benefits of Third Parties”, Consultation Paper No. 121 (1991) at 69, para. 4.4 (iii) [UK Consultation Paper].

[13]. Hong Kong Report, supra note 9 at 14; UK Consultation Paper, supra note 12 at 66.

[14]. Hong Kong Report, ibid. at 15; UK Consultation Paper, ibid.. at 67.

[15]. Hong Kong Report, ibid.; UK Consultation Paper, ibid. at 68.

[16]. Hong Kong Report, ibid.; UK Consultation Paper, ibid. at 66.

[17]. Hong Kong Report, ibid.; UK Consultation Paper, ibid. at 69.

[18]. Alta. Reg. 390/1968.

[19]. See for example, article 5 of the U.K. Contracts (Right of Third Parties) Act 1999.

[20]. Hong Kong Report, supra note 9 at 16; UK Consultation Paper, supra note 12 at 70.

[21]. Hong Kong Report, ibid.; UK Consultation Paper, ibid. at 66.

[22]. Hong Kong Report, ibid.; and Law Commission of England and Wales, APrivity of Contract: Contracts for the Benefit of Third Parties@, Report No. 242 (1996) at 39-40 [UK Report].

[23]. Fraser River, supra note 1 at para. 36.

[24]. UK Report, supra note 22 at 41; Hong Kong Report, supra note 9 at 17.

[25]. Ibid.

[26]. Supra note 12. Stevens asserts that the intention of parties to the contract is better protected by giving adequate remedies to the promisee. That is, it is the expectations of the promisee that are frustrated by the doctrine of privity rather than those of the third party.

[27]. UK Report, supra note 22 at 40; Hong Kong Report, supra note 9 at 19.

[28]. See for example, Beswick v. Beswick, [1968] A.C. 58 (H.L.).

[29]. UK Report, supra note 22.

[30]. UK Report, ibid. at 39; Hong Kong Report, supra note 9 at 19.

[31]. London Drugs, supra note 1 at 436-437.

[32]. Ontario 1987, Manitoba 1993 and Nova Scotia 2004.

[33]. Supra note 5, at 196, para. 285.

[34]. Ibid., at 197, para. 287.

[35]. Hong Kong Report, supra note 9 at 15.

[36]. Ibid. at 12-13.

[37]. [1932] AC 562 (H.L.).

[38]. Hong Kong Report, supra note 9 at 7.

[39]. Tulk v. Moxhay (1848) 2 Ph 774 (C.h.).

[40]. 1 [1951] 2 KB 854.

[41]. R.S.A. 2000, c. I-3.

[42]. See also, for example, comparable provisions: s. 195 Insurance Act (On.), R.S.O. 1990, c.I.8 and s. 53 of Insurance Act (B.C.) [R.S.B.C. 1996] c. 226.

[43]. See also, for example, comparable provisions: s. 258 Insurance Act (On) and s. 159 Insurance Act (B.C.).

[44]. 1998 ABQB 842.

[45]. Ibid. at para. 20.

[46]. London Drugs, supra note 1.

[47]. London Drugs, supra note 1 at 449.

[48]. Fraser River, supra note 1at 125-126.

[49]. London Drugs, supra note 1at 446.

[50]. UK Report, supra note 22 at 163-176.

[51]. Supra note 4 at 15.

[52]. London Drugs, supra note 1at 450.

[53]. Fraser River, supra note 1at 132.

[54]. 2000 ABQB 31 at paras. 32-33.

[55]. Ibid. See also, for example, 804977 Alberta Ltd v. Lowrie, 2003 ABQB 234 at paras. 28-29 where the Court discusses that major reforms to the rule denying third parties the right to enforce contractual provisions for their benefit, must come from the legislature. AIf shareholders of a corporation are to be beneficiaries under corporate contracts it will have to be made so by legislation, which would certainly be a radical departure from present corporations law.@

[56]. (2004), 26 Alta. L.R. (4th) 337, aff’d (2005), 256 D.L.R. (4th) 395 (A.B.C.A.).

[57]. (1999), 43 O.R. (3d) 633 (C.A.)

[58]. Ibid. at para. 28.

[59]. [2000] B.C.J. No. 2550 at paras. 67- 76 (S.C.) (Q.L.).

[60]. Supra note 4 at 17.

[61]. Comparison based on article by M.H. Ogilvie “Privity of Contract in the Supreme Court of Canada: Fare Thee Well or Welcome Back” [2002] J.B.L. 163.

[62]. Contracts (Rights of Third Parties) Act 1999 (U.K.) 1999, c. 31, s. 1(3) [U.K. Act ].

[63]. Fraser River, supra note 1at para. 36.

[64]. U.K. Act, s. 2.

[65]. U.K. Act, s. 3.

[66]. At the same time, they did not favour any expansion of the exceptions to allow third parties to enforce a contract. In particular, there were concerns that there could be a flood of litigation if third parties were able to sue to enforce contracts intended for their benefit, concerns about how “third parties” would be defined and concerns that any legislative reform might further complicate the current situation.

[67]. Law Reform Act, S.N.B. 1993, c. L-1.2.

[68]. S.4(1) of Law Reform Act provides that:

a person who is not a party to a contract but who is identified by or under the contract as being intended to receive some performance or forbearance under it may, unless the contract provides otherwise, enforce that performance or forbearance by a claim for damages or otherwise.

[69]. Supra, note 67, s. 4(2).

[70]. Ibid., s. 4(3).

[71]. Manitoba Law Reform Commission, Privity of Contract (Winnipeg: The Commission, 1993) at 53-54.

[72]. Day & Ross Inc. V. Beaulieu, 2005 NBCA 25, 250 D.L.R. (4th) 533.

[73]. S.Q. 1991, c.64.

[74]. Law Reform Commission of Nova Scotia, Privity of Contract (Third Party Rights) (Halifax: The Commission, 2004).

[75]. Supra note 68.

[76]. Ontario Law Reform Commission, Report on Amendment of the Law of Contract (Toronto: The Commission, 1987).

[77]. Ibid. at 68.

[78]. Ibid. at 69.

[79]. Ibid. at 71.

[80]. UK Report, supra note 22 at 39-40.

[81]. Ibid. at 65, para. 5.8.

[82]. The Law Commission (for England and Wales) and the Scottish Law Commission have recommended further reforms in relation to the Third Parties (Rights against Insurers) Act 1930. See Report No. 272, Third Parties- Rights Against Insurers, July 2001. While the UK Government announced that it had accepted these proposals, it does not appear that legislative reforms have been implemented.

[83]. Stevens, supra note 12 at 317.

[84]. Law Reform Advisory Committee for Northern Ireland, Privity of Contract: Contracts for the Benefit of Third Parties, Report Nos. 4-6 (Dublin: LRAC, 2006).

[85]. New Zealand Law Commission, Contract Statutes Review, Report No. 25 (Wellington: The Commission, 1993) at 228.

[86]. Western Australia was the first common law jurisdiction to legislatively reform the law of privity (The Property Law Act 1969, no. 32 of 1969). In 1974 Queensland followed with passage of the Property Law Act (no. 76 of 1974).

[87]. Supra note 74 at 10.

[88]. (1988), 165 C.L.R. 107 (H.C.A).

[89]. Law and Revision Division, Attorney-General=s Chambers, Singapore, Report on the Proposed Contracts (Rights of Third Parties) Bill 2001 (The Adelphi: LRRD No. 2, 2001).

[90]. Hong Kong Law Reform Commission, Press Release (15 October 2005).

[91]. 20 N.Y. 268 (N.Y 1859).

[92]. UK Report, supra note 22 at 60.

[93]. Ibid. at 61.

[94]. The Civil Code of the State of California (1985),' 1559, as cited in supra note 74 at 11.

[95]. UNIDROIT, Working Group for the Preparation of Principles of International Commercial Contracts, Third Party Rights (Rome: UNIDROIT, 2003) Study L- Doc. 83.

[96]. In considering the possibility of judicial reform versus legislative reform, one commentator put it, A[a] provincial patchwork of legislation is not likely preferable to a nationally-binding decision of the SCC, although the piece-meal nature of judicial law-making will result in a protracted reform of privity law as Fraser River is applied in the future.@ Supra note 61 at 171.

[97]. London Drugs, supra note 1 at 449.

[98]. See Linden Gardens Trust v. Lenesta Sludge Disposals [1993] 3 W.L.R. 408 (H.L.); Darlington Borough Council v. Wiltshier Northern Ltd. [1995] 1 W.L.R. 68 (C.A.); McAlpine Construction Ltd v. Panatown Ltd. [2000] 3 W.L.R. 946 (H.L.).

[99]. Stevens, supra note 12.

[100]. Supra note 76 at 71. It should be noted that the wording proposed by the Ontario Law Reform Commission does not make it clear by whom the contracts would be enforceable.

Bibliography

(Excludes case law and statutory references)

1. J. Beatson, Anson’s Law of Contract, 28th ed. (Oxford: Oxford University Press, 2002).

2. The Law Commission (for England and Wales), Privity of Contract: Contracts for the Benefit of Third Parties, Law Com No. 242, 1996.

3. Law Reform Advisory Committee for Northern Ireland, Privity of Contract: Contracts for the Benefit of Third Parties, Report Nos. 4-6 (Dublin: LRAC, 2006).

4. Law Reform Commission of Nova Scotia, Privity of Contract (Third Party Rights) (Halifax: The Commission, 2004).

5. Law Reform Commission of Hong Kong Privity of Contract Sub-Committee, Consultation Paper, Privity of Contract (Wanchai: The Commission, 2004).

6. Law and Revision Division, Attorney-General=s Chambers, Singapore, Report on the Proposed Contracts (Rights of Third Parties) Bill 2001 (The Adelphi: LRRD No.2, 2001).

7. Manitoba Law Reform Commission, Privity of Contract (Winnipeg: The Commission, 1993).

8. New Zealand Law Commission, Contract Statutes Review, Report No. 25 (Wellington: The Commission, 1993).

9. M.H. Ogilvie APrivity of Contract in the Supreme Court of Canada: Fare Thee Well or Welcome Back@ [2002] J.B.L. 163.

10. Ontario Law Reform Commission, Report on Amendment of the Law of Contract (Toronto: The Commission, 1987).

11. David Percy, APrivity of Contract: The Final Siege of the Citadel@ (Paper presented April 2000) at 3 [unpublished].

12. Robert Stevens, AThe Contracts (Rights of Third Parties) Act 1999" (2004) 120 L.Q.R. 292.

13. Doug Stollery, Memorandum to Peter Lown, Re: Third Party Beneficiaries, December 10, 2002.

14. UNIDROIT, Working Group for the Preparation of Principles of International Commercial Contracts, Third Party Rights (Rome: UNIDROIT, 2003) Study L- Doc. 83.

15. S.M. Waddams, The Law of Contracts, 5th ed. (Aurora: Canada Law Book, 2005).

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