This law is now effective in the Cayman Islands. In all
substantive respects the provisions of the law will be familiar to
English lawyers as it follows, in the main, the Contracts (Rights
of Third Parties) Act 1999, save the Cayman law requires express
wording to opt in.
A third party who would otherwise under laws of contract not
have been in a position to enforce that contract may now do so if
sufficiently well identified by name or class or description and if
expressly entitled to such third party right.
Any remedy including damages, injunction and specific
performance available for breach of contract is now available to
such third party who is, understandably, also subject to and may
benefit from any provision in the contract excluding, limiting or
exculpating liability. The promisor may plead set off or
counterclaim against the third party as if the third party had been
a party to the contract.
A contractual term of an existing contract purporting to grant
such third party right is enforceable after 21 May 2014, the
effective date. A contract not containing such third party right
may be amended after that date to enable enforcement subsequent to
A third party granted such third party right is required to
consent to any rescission or variation of the contract unless the
contract otherwise provides.
Such third party is subject to any submission to arbitration in
the contract and, as in the United Kingdom, there are provisions
which protect a promisor against double liability.
Notably, the law does not apply to:
the contract contained with the memorandum or articles of
association of a company. Absent a specific separate directors
agreement, it seems therefore the director will continue to have to
rely on a collateral contract;
a contract on a bill of exchange, promissory note or other
a contract of employment against an employee;
a contract for carriage of goods;
a letter of credit.
Unlike the position in the UK, express wording will need to be
included in the contract to ensure a third party can benefit from
these statutory provisions.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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