UK: Third Party Rights And Scots Law Contracts – What Is The Position?

Last Updated: 2 September 2018
Article by Elisha Hale

The law in Scotland changed in 2018 regarding the creation of enforceable third party rights in contracts. The Contract (Third Party Rights) (Scotland) Act 2017 came into force on 26 February 2018.

We're often asked by companies about the impact of the Act on their commercial contracts.

What is a "third party right"?

A third party right arises where someone who is not a party to a contract has a benefit conferred on them by the contract.

For example, A and B might agree that A will pay £100 to C. C is the third party.

Examples in practice include:

  • an individual books a holiday with a tour provider on behalf of a group but only that one individual is party to the contract;
  • a spouse takes out a life assurance policy and the lump sum would be payable to the other spouse;
  • a software supplier enters into a licence agreement with a client company and the licence is for the benefit of the client and all its subsidiaries.

Can third parties enforce their rights under a contract?

The general rule is that only the parties to a contract can enforce its terms.

So, if A and B agree that A will pay £100 to C, and A fails to do so, C would not be able sue A for the £100. Although the contract has conferred a right on C, C cannot enforce it because C is a third party.

However, many legal systems – including Scotland – have exceptions to this rule.

The rules in Scotland were unclear and not very user-friendly. The 2017 Act replaced the old rules and made it easier to create enforceable third party rights under Scots law.

Creating enforceable third party rights

There are three conditions which must be satisfied to create an enforceable third party right under Scots law under the Act:

  • the contract must contain an undertaking that one or more of the parties to it will or will not do something for the benefit of a third party;
  • that third party must be identified in the contract, or be capable of being identified (e.g. "the Client's subsidiaries from time to time"); and
  • the contracting parties must intend that the right is to be enforceable by the third party.

There is no need for the contract to refer specifically to the Act: if the above conditions are met, an enforceable third party right will be created.

Can third party rights be varied or taken away?

Yes, third party rights can be amended or revoked subject to certain conditions being met.

However, the Act contains provisions that protect third parties from having their rights changed or taken away in certain situations without their consent, so care needs to be taken when drafting the contract.

Can you prevent a third party from having an enforceable right?

Yes. The contract can expressly exclude the Act.

So, if A and B agree that A will pay £100 to C, and the Act is excluded under the terms of the contract, C would not be able sue A for the £100 if A failed to pay.

How does this impact my business?

The first thing to note is that the Act only applies to contracts entered into after the Act came into force. Contracts entered into prior to 26 February 2018 will not be impacted and will instead remain subject to the old Scots law regime.

For contracts entered into from that date, it's all about working out what your – and the other contracting party's – intentions are to ensure that the third party rights clauses accurately represent what you want to achieve.

It may be that none of your contracts confer any third party rights at all – in which case the Act is irrelevant.

But, if they do, you need to think about whether you want to take advantage of the Act to ensure that the third party rights are enforceable by the third party – or (conversely) to exclude the Act altogether.

If you want the contract to confer an enforceable third party right, what flexibility do the contracting parties need to be able to change or remove that right? Extra drafting is likely to be needed to ensure you have the required flexibility.  This is an area where your legal adviser can help.

Bear in mind that other legal systems have their own rules on third party rights. In particular, while the 2017 Act is similar to the English Contracts (Rights of Third Parties) Act 1999, there are a number of subtle differences. This means that it won't be appropriate to just copy over an English law clause into a Scots law contract.

How can Brodies help?

Our Corporate and Commercial Team can help you to ensure that your contracts achieve the third party rights position that you require. You may also wish to review any template agreements that your organisation uses.

You can also look at Brodies' handy guide for more detailed information on this legislation.

If you would like any further information relating to the creation or exclusion of third party rights under Scots law, please do not hesitate to get in touch.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Shepherd and Wedderburn LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Shepherd and Wedderburn LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions