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Clarifying contract law 07/02/2017 A Bill to reform contract law on third party rights was introduced to the Scottish Parliament last week.

Clarifying contract law

A Bill to reform contract law on third party rights was introduced to the Scottish Parliament last week. The Contract (Third Party Rights) (Scotland) Bill will bring the law up-to-date and ensure it is flexible and fit for purpose.

This is the first time third party rights – a right a person has under a contract they are not the party to – will be provided for in legislation that applies generally to all types of contract.

Provisions include:

  • Setting out when someone who is not party to a contract gets third party rights
  • Providing third parties with the same remedies as a contracting party (subject to exceptions)
  • Setting out when third party rights can be modified or cancelled
  • Enabling third parties to access arbitration to resolve disputes in certain circumstances.

The Bill implements recommendations from the Scottish Law Commission on this area of contract law, replacing the existing common law with a clearer and more usable statutory regime.

“Contracts form part of everyday life and third party rights can provide important benefits or protections,” said Minister for Legal Affairs, Annabelle Ewing. “This is an area of law that is ripe for reform and this Bill will enable the creation of third party rights which may be beneficial to individuals and families as well as businesses. Reform will remove a practical barrier for commercial transactions, and keep Scots law fit for purpose by making sure it is flexible enough for modern day expectations.”

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