Changes now in force for business contracts involving third parties
A new Act which changes how contracts are formed under Scots law will affect third parties who expect to have benefits or rights under that contract. A third party can be an individual, company or other body who has not entered into the contract by signing on the dotted line.
The Contract (Third Party Rights) (Scotland) Act 2017 (“the Act”) came into force on 26 February 2018 and it sets out clear rules as to how contracting parties can create rights for third parties.
Previously, contracting parties could create rights for third parties using the common law doctrine known as jus quaesitum tertio. This inflexible and infrequently used doctrine set out how valid third party rights could be created but its principles were too restrictive, unclear and it wasn’t considered fit for purpose.
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