Start reading the news feed of Lexis Insights right away by subscribing our social media channels
Lexis Insights
Legal News, Views, and Insights from LexisNexis Hong Kong
The Contracts (Rights of Third Parties) Ordinance (Cap 623) (“Ordinance”) came into operation on 1 January 2016. According to the Ordinance, a third party may enforce a contractual term if the contract expressly provides that the third party may do so or the term purports to confer a benefit on the third party. However, the Ordinance is silent on how to decide whether a contract has sufficiently identified the third party. The Hong Kong courts also have not decided on this issue yet.
Recently, the English High Court has provided useful guidance on the identification of third parties that may enforce contractual rights under the Act in Chudley v Clydesdale Bank plc (t/a Yorkshire Bank) 2017 EWHC 2177. One of the issues before the court was whether under the Act, the requirement that the third party be expressly identified in the contract could be achieved by a process of construction. The court stated in obiter that for the purposes of the Act, it was possible to identify an unnamed class or persons who could enforce their rights under a contract by construction of the relevant express terms of the contract. The term can be relied on both to show that third parties were intended to benefit from a contract and to identify expressly a category of third parties intended to so benefit. If Hong Kong ever come across similar issues in the future, it is likely that the Hong Kong courts would make reference to Chudley.
Find out more in: