Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Contract definition

What does Contract mean? In legal practice, a contract is the enforceable agreement by which parties set out promises and allocate risk, whether made orally, in writing or by conduct. The law of contract is principally case-law driven across England & Wales, Scotland, Northern Ireland and Ireland, with statutory interventions on formalities, construction and consumer protection. In England & Wales, Northern Ireland and Ireland, formation generally requires offer, acceptance, consideration and an intention to create legal relations. In Scotland, consideration is not required; a contract is formed by agreement (consensus in idem) with the necessary intention, with writing only needed in defined cases. Key features...

Privity and third party rights: when non-parties can sue or be sued: C(RTP)A 1999, collateral warranties, group contracts, agency and sub-agency

Published by a LexisNexis Dispute Resolution expert

Practice notes

This Practice Note explores why a third party might wish to rely on a Contract to which it is not privy, and assesses whether, on the facts, the Common law doctrine of privity can be avoided by recognising instead a collateral contract, a group contract, or an agency arrangement in the circumstances.

Why consider the effects of contracts on third parties?

Although your client is not party to the agreement in question, you may still need to determine whether they might be:

liable for any obligations that arise; or
entitled to enforce any benefits conferred by the contract.

Consider the following scenarios:

in a contract between A (promisor) and B (promisee), A undertakes to pay £1,000 to C (third party)
in a contract between A (promisor) and B (promisee), A agrees that any liability in relation to C (third party) shall be limited to £5,000

In each of these examples, C receives a benefit (payment of £1,000 and a restriction of their liability to a fixed amount of £5,000, respectively) that C may wish to take advantage of.

Alternatively, within a group supply arrangement, a parent supplier (S) may have agreed with a parent customer (C) that S will supply,...

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Web page updated on 21/05/2026

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