Third Party Rights: A Comparison of English and German Law with Respect to the UNIDROIT Principles on International Commercial Contracts

Inhaltsverzeichnis

INTRODUCTION

A. THIRD PARTY RIGHTS IN ENGLISH LAW
I. The Doctrine of Privity
1. Development
2. Reasons for the Privity Rule
3. Exceptions to the Doctrine
i) Agency
ii) The Trust Device
iii) Insurance Contracts
II. The Contract (Rights of Third Parties) Act 1999
1. Reform of the Privity Rule
2. The New Act

B. THE APPROACH TO THIRD PARTY RIGHTS IN GERMAN LAW
I. Historical Outline
II. Promise of Performance for the Benefit of a Third Party
III. The Interrelationship of Contract and Tort
1. German Law: Contract with Protective Effect for Third Parties
2. The Duty of Care in English Law
3. The German Concept of Drittschadensliquidation

C. THIRD PARTY RIGHTS IN THE UNIDROIT PRINCIPLES
I. Introductory Remarks
II. The Draft UNIDROIT Provisions on Third Party Rights
III. Exemption Clauses for the Benefit of Third Parties

CONCLUSION

Andrews, N., “Strangers to Justice no longer: The Reversals of the Privity Rule under the Contracts (Rights of Third Parties) Act 1999”[2001](60)2 C.L.J. 353

Boele- Woelki, K., “Principles and Private International Law - The UNIDROIT Principles Of International Commercial Contracts And The Principles Of European Contract Law: How To Apply Them To International Contracts”[1996]4 Uniform Law Review 652

Brox, H. and Walker, W.D. Allgemeines Schuldrecht (28th ed. 2002, C.H. Beck)

Bridge, M., “The Contracts (Rights of Third Parties) Act 1999”[2001]5 E.L.R. 85

Furmston, M. , Cheshire, Fifoot & Furmston’s Law of Contract (14th ed. 2001, Butterworths)

Goren, S.L., The German Civil Code as Amended on January 1, 1992 (1st ed. 1994, Rothman & Co.)

Kortmann, B. and Faber, D., “Contract and Third Parties” in Hartkamp, A.S. (eds.), Towards A European Civil Code (1st ed. 1994, Martinus Nijhoff Publishers) at pp. 237 et seq

Lando, O. and Beale, H., Principles of European Contract Law (1st ed. 2000, Kluwer Law International)

Letterman, G.G., Unidroit’s Rule in Practice: Standard International Contracts and Applicable Rules (1st ed. 2001, Kluwer Law International)

Lorenz, W., “Contracts and Third- Party Rights in German and English Law” in Markesinis,

B.S. (ed.), The Gradual Convergence - Foreign Ideas, Foreign Influences and English Law on the Eve of the 21st Century (1st ed. 1994, Clarendon Press) at pp. 65 et seq

Musielak, H.- J., Grundkurs BGB (4th ed. 1994, C.H. Beck)

Palandt, Kommentar zum Bürgerlichen Gesetzbuch (62nd ed. 2003, C.H. Beck)

Treitel, G.H., The Law of Contract (10th ed. 1999, Sweet and Maxwell)

UNIDROIT International Institute for the Unification of Private Law, Principles of

International Commercial Contracts, Rome, 1994

UNIDROIT International Institute for the Unification of Private Law, Working Group for the Preparation of Principles of International Commercial Contracts, Draft Chapter on THIRD PARTY RIGHTS (Revised Draft Chapter prepared by Professor Michael Furmston in the light of the meeting of the Drafting Group in Louvain- la- Neuve, 06 - 10 January 2003) Document: UNIDROIT 2002 Study L - WP.10. (not published)

Zweigert, K. and Kötz, H., An Introduction to Comparative Law (3rd ed. 1998, Oxford University Press)

LIST OF CASES

GERMAN COURT DECISIONS

Some English translations of legal decisions of the German Reichsgericht (Imperial Court) and the

Bundesgerichtshof (Federal Court of Justice) are available at the website of the University College London - Institute of Global Law and Institute of Transitional Law under

>http://www.ucl.ac.uk/laws/global_law/cases/german/index.html<.

Bundesgerichtshof 06 July 1965,[1965]Neue Juristische Wochenschrift 1955. BGHZ 49, 355.

BGHZ 51, 96. BGHZ 54, 147 BGHZ 54, 293 BGHZ 70, 329 RGZ 102, 232. RGZ 127, 218.

DECISIONS OF ENGLISH COURTS Beswick v. Beswick[1966]Ch. 538. Beswick v. Beswick[1968]A.C. 58. Bourne v. Mason[1669]1 Ventr.6. Crow v. Rodgers[1724]1 Str. 592.

Darlington Borough Council v.Wiltshier[1995]3 All.E.R. 895. Dunlop v. Selfridge[1915]A.C. 847 at p. 853.

Dutton v. Poole[1678]2 Lev. 210.

Elder, Dempster & Co. v. Paterson, Zochonis & Co.[1924]A.C. 522

Green v. Russell[1959]2 Q.B. 226

Gregory and Parker v. Williams[1817]3 Mer. 582;

Leigh and Sillivan Ltd. v. Aliakmon Shipping Co. Ltd.[1985]Q.B. 350. Leigh and Sillivan Ltd. v. Aliakmon Shipping Co. Ltd.[1986]A.C. 785 Lloyd’s v. Harper[1880]16 Ch.D. 290.

Les Affréteurs Réunis, S.A. v. Leopold Walford (London) Ltd.[1919]A.C. 801. Martyn v. Hind[1776]Cowp.437.

Pople v. Evans[1969]2 Ch. 255.

Punjab National Bank v. de Boinville[1992]1 W.L.R. 1138.

Re Schebsman, Official Receiver v. Cargo Superintendents (London) Ltd. and Schebsman

Note:

Handelsgesetzbuch (HGB) - the German Commercial Code as amended.

Law of Property Act 1925.

Marine Insurance Act 1906.

Married Women’s Property Act 1882. Road Traffic Act 1988.

Third Parties (Rights Against Insurers) Act 1930. Unfair Contract Terms Act 1977.

Unfair Terms in Consumer Contracts Regulations 1994.

Versicherungsvertragsgesetz (VVG) - the German Law Relating to Insurance Contracts.

Student No. CLAWS 0229392 Comparative Contract Law LL.M. 2002/03

The question as to whether a third party can be granted rights or protection based on a

contract between two other parties to which the third party is a mere stranger is as old as the legal scholarship of contract law itself. Over centuries, quite different approaches to the issue have been evolved and embedded in different legal systems, each with its own characteristics and fea- tures. This essay intents primarily to analyse and compare the approaches of English^[1] and Ger- man Law to third party rights arising from bilateral contracts, particularly with regard to contracts for the benefit of a third party and the new Contracts (Rights of Third Parties) Act 1999. How- ever, despite this main focus, some other features related to third party involvement in mutual contracts will be considered too. In the first and the second part of this essay I will describe the modus operandi of English and German law with regard to third party rights and highlight differ- ences and similarities. The third part of this paper concerns the approach of that what is some- times called an international restatement of contract law, namely the UNIDROIT Principles of International Commercial Contracts,^[2] to the rights of third parties. A comparison of the English and German system with the restatement will illustrate to what extent elements of these two na- tional legal systems have been implemented and considered in an international project of unific a- tion of law.

A. THIRD PARTY RIGHTS IN ENGLISH LAW

A contract is an agreement giving rise to obligations which are enforced or recognised by law.^[3] In general, the normal intention of persons who enter into a mutual contract, for example a contract of sale, is that the rights and obligations arising from that contract shall entitle and obli- gate the parties to it alone. The same is even true if the parties agree that one or both of them may discharge his liability under the contract by rendering performance to someone else: for example the purchaser pays the price to the vendor’s bank instead to the vendor himself and/or the vendor, a retailer, does not deliver the ordered goods himself to the purchaser, but rather instructs his wholesaler to deliver directly to the purchaser. In such obvious cases, nobody would assume that the bank involved can claim payment of the purchase price from the purchaser or that the pur- chaser can sue the wholesaler for delivery of the goods. However, the situation is quite different in particular cases where the parties A and B contract in such a manner that the third party C, who is not itself involved in the formation of the contract, is to be entitled not only to receive the promised performance but can in fact demand it from one of the contracting parties in its own name. In contracts of such type the promisee and the promisor agree that the latter will perform a Student No. CLAWS 0229392 Comparative Contract Law LL.M. 2002/03 service (the “promise”) for the benefit of a third party, called the beneficiary.^[4] If the promisor does not perform or performs badly, the beneficiary may sue on the contract concluded between promisor and promisee.

I. The Doctrine of Privity

1. Development

The common law doctrine of privity means that a contract cannot, as a general rule, con- fer rights or impose obligations arising under it on any person except the parties to it.^[5] In the middle of the 18th century, the question as to whether a person could enforce a contract to which he was not a party was quite controversial. Some courts did occasionally enforce contracts for the benefit of third parties^[6], others did not.^[7] The leading case in which the third party was finally de- nied such a right to enforce the contract was Tweddle v. Atkinson^[8]. This case is generally consid- ered to have established the doctrine of privity in English law. The House of Lords reaffirmed this approach in 1915 and declared the principle that only parties of a contract can sue on it is a “fundamental” one of English Law.^[9] The leading modern case which reaffirms the doctrine is Beswick v. Beswick^[10] where a coal merchant transferred his business to his nephew who in return made inter alia the promise that he would, after the uncle’s death, pay 5 per week to the uncle’s widow. The uncle died and the widow became his administratrix. She sued the nephew as he re- fused further payment both in her own right and in her quality as administratrix. The House of Lords rejected the widow’s claim in her own right as she was not party to the contract concluded between her husband and the nephew and therefore could not acquire any rights under it. How- ever, the House of Lords held that she was entitled to demand payment from the nephew as ad- ministratrix of her husband’s estate. A rule of privity, which provides that a contract will be pri- marily a matter between the contracting parties, is recognised in any legal system to a certain ex- tent. However, results like the latter, where the third party cannot derive any contractual rights even if the contracting parties clearly intend to confer benefits to the third party, are unique in English law. In Beswick v. Beswick , for example, the only purpose of the contract was to confer enforceable rights on the widow. This is also true for the afore mentioned cases Dunlop v. Sel- fridge and Tweddle v. Atkinson. The fact that the widow in Beswick v. Beswick could only suc- ceed with her claim because of her status as administratrix seems to be absurd because this was Student No. CLAWS 0229392 Comparative Contract Law LL.M. 2002/03 mere chance. The nephew himself might have been the administrator, and then the widow might have got nothing.

2. Reasons for the Privity Rule

Many cases decided by English courts relied on the “doctrine of privity”, but only a few gave some thoughts why privity ought to be the rule. As Treitel pointed out,^[11] the common law doctrine of privity can scarcely be justified by saying that a contract is a personal relationship which affects only the parties to it. This is rather a statement of the rule than a reason for its ex- istence. From a comparative perspective and for practical purposes, it seems more demonstrative if one regards the common law rule that consideration must move from the promisee as an expla- nation for the doctrine of privity.^[12] In English law a promise is not, as a general rule, enforceable as a contract unless it is either made in a deed or supported by some consideration.^[13] The ex- change of consideration which constituted the bargain in classical English contract law estab- lished the necessary connection of dependency and trust, which if disappointed by non- performance, entitled the parties of a contract to sue on it. The rule that consideration must move from the promisee means that a person to whom a promise is made can enforce it only if he him- self provided consideration for it.^[14] He cannot sue if the consideration for the promise moved from a third party. Although in Tweddle v. Atkinson, the parties to a written contract provided ex- pressly that the beneficiary shall have “the full power to sue the parties in any court of law or eq- uity for the aforesaid sums hereby promised and specified,” the beneficiary’s claim failed be- cause he did not provide any consideration to the promise. The question as to whether any con- sideration was given by the beneficiary was also considered by the House of Lords in Dunlop v. Selfridge. However, the decision was somewhat distinct from Tweddle v. Atkinson as Lord Hal- dane emphasised expressly that English law in general “knows nothing of a jus quaesitum tertio arising by way of contract.”^[15] Thus, one can conclude that a person who is not party to a contract can not sue on it, even if he has provided some consideration. It should be noted, that the doctrine of privity does not exclude other remedies of the third party, for example ones based on tort.

3. Exceptions to the Doctrine

There are various cases imaginable where it is desirable to grant the third party the right Student No. CLAWS 0229392 Comparative Contract Law LL.M. 2002/03 to demand performance directly from the promisor if both, promisor and promisee, stipulate so. An obvious example are life insurance contracts where the promisor and the insured stipulate performance to a third party nominated by the insured. Other examples are savings or deposit ac- counts where a third person is nominated as account holder, sale of goods where a warranty provided by the manufacturer is running with the goods, or negotiable instruments such as cheques or bills of exchange which are commonly used as means of payment in trade. Strict application of the doctrine of privity is one of the biggest obstacles to the enforcement of such contracts in English law by a third party. The doctrine causes in particular commercial inconvenience where close contractual interweavements between various trade parties exist and produces unjust results. Thus some qualifications to the general rule of privity have been evolved. Some of them are judge- made and others are due to the intervention of Parliament.^[16]

i) Agency

A major common law exception to the doctrine is agency. This is the relationship where one person (the principal) authorises another (the agent) to act on his behalf. Since the agent is merely the principal’s instrument for concluding the contract, one could conclude that agency is only an apparent exception. However, when the agents acts without actual but within his “usual authority”^[17] or in cases where the principal is undisclosed,^[18] the principles of agency constitute a clear exemption to the rule of privity.

ii) The Trust Device

The rule has also been modified by the equitable doctrine of constructive trust. A trust is an equitable obligation imposed on a person, the trustee, to hold and manage an item of property, transferred to him by the trustor, on behalf of another, the beneficiary. Usually the subject matter of a trust is some tangible property such as land or goods or a definite sum of money. The courts of equity developed, moreover, the “trust of promise”. In Tomlinson v. Gill,^[19] it was ruled that in cases where A promised B to pay a sum of money to C, B can be regarded as trustee of that promise for C. The third party (C) could therefore enforce the promise against the promisor (A), who acts as trustor. The “trust of promise” as an alternative to the contract for the benefit of third parties was affirmed in a number of subsequent cases.^[20] In 1919, the House of Lords approved this equitable doctrine in the well- known Walford’s^[21] case: The broker Walford arranged a char- terparty by which the shipowner promised the charterer to pay the broker commission. It was held, that the charterer was trustee of the promise for the broker and thus the broker could enforce Student No. CLAWS 0229392 Comparative Contract Law LL.M. 2002/03 it against the shipowner. Such decisions demonstrate the occasional attempts to evade the doc- trine of privity. Although it appears as an effective means to reach convenient results, the device has in practice also proved to be a disappointing and unreliable instrument.^[22] The courts have been rather reluctant to construe a trust and many of the decided cases are inconsistent,^[23] perhaps because the trust, recognised as an institution of property law might unduly undermine the rule of privity if every contractual right could be construed as the intention to create a trust.^[24] Another attempt to evade the doctrine of privity and to enable third parties to sue upon a contract was rejected by the House of Lords in the earlier mentioned case Beswick v. Beswick. The case was inter alia concerned with the construction of Section 56(1) in conjunction with Section 205(1) of the Law of Property Act 1925. The former one provides that “a person may take an immediate or other interest in land or other property, or the benefit of any condition, right of entry, covenant or agreement over or respecting land or other property, although he may not be named as a party to the conveyance or other instrument.” Section 205(1) stipulates that, unless the context requires otherwise, the word “property” means any interest in real or personal prop- erty. Liberally interpreted, the reference to “other property” could embrace contractual rights.^[25] However, the House of Lords held, that Section 56(1) was limited to realty, because there was a presumption that the Law of Property Act 1925, as a consolidating act, is not intended to alter the common law.^[26]

iii) Insurance Contracts

As the doctrine applies to insurance contracts,^[27] where it is absolutely common practice that the parties stipulate payment of the insurance sum in favour of a third party, the latter has no claim at common law. Thus a number of exceptions have been introduced through Acts of Parliament, to meet the requirements of modern contract law and to redress particular grievances caused by the privity rule, in particular in the insurance sector. One of the oldest legislative exceptions is section 11 of the Married Women’s Property Act 1882 which provides that where a man or a woman insures his life for the benefit of his/her spouse or children, the policy shall create a trust in favour of the objects named therein. The spouse or the children, although they are not parties to the contract with the insurance company, can sue upon it.

Other examples for statutory exceptions are Section 148(7) of the Road Traffic Act 1988, Student No. CLAWS 0229392 Comparative Contract Law LL.M. 2002/03 the Third Parties (Rights Against Insurers) Act 1930 and Section 14(2) of the Marine Insurance Act 1906. One should note, that most of these codified exceptions, are based on former judge- made law. So for example in the case of the Road Traffic Act 1988 where the provision relevant for the third party claim is based on the decision Williams v. Baltic Ins. Co.,^[28] which employed again the legal instrument of the trust to create a claim against the motor car insurer in favour of the third party who drove the car with the car owner’s consent. The latter was deemed to be trus- tee for the rights of the actual driver.

II. The Contract (Rights of Third Parties) Act 1999

1. Reform of the Privity Rule

The difficulties of reaching satisfactory results by strict application of the doctrine have already been illustrated. The attempt undertaken by the Law Revision Committee in 1937 to adopt reforms was not successful and was rejected.^[29] However, in the last decades, the number of critical voices who condemned the doctrine increased rapidly. Even judges expressed openly their disagreement to the rule. Lord Diplock for example, called the privity rule “an anachronistic shortcoming that has for many years been regarded as a reproach to English law”.^[30] In 1991 the Law Commission produced a Consultative Paper^[31] which ignited a long- lasting legislative proc- ess of eight years. The Contracts (Rights of Third Parties) Act in 1999 was eventually based on proposals included in the Law Commission Report^[32] 1996.^[33] The new law makes fundamental changes to the doctrine of privity of contract and is regarded as one of the most important pieces of legislation in recent years to affect English law.^[34] However, the Act does not seek to abolish the doctrine of privity, instead it is rather seen as a large exception to it.^[35]

2. The New Act

Section 1 of the new Act enables a third party beneficiary to gain a direct right of action against a promisor. The beneficiary may thus enforce a contract between promisor and promisee Student No. CLAWS 0229392 Comparative Contract Law LL.M. 2002/03 intended to confer a benefit upon him. The new legislation thus rejects the earlier mentioned propositions as formulated in Dunlop v. Selfridge and Tweddle v. Atkinson.^[36] The centrepiece of the new Bill is a test for identifying the provisional rights of a third party. Pursuant to Section 1(1)(a) and (b) a third party may acquire enforceable contractual rights either if the contract expressly provides so or where the contract purports to confer a benefit on him. The latter assumption is depending on as to whether the parties intend to confer a benefit on the third party. Thus, in this case, accurate objective construction of the contract is necessary. The fundamental principle underlying the reform is that of party autonomy: the parties should be free to create a right by contract with other parties if they want to.^[37] This is demonstrated by the flexi- ble approach which the Act takes in terms of variation and rescission of the rights, conferred to the third party. Section 2, which contains the respective stipulations, leaves promisor and prom- isee enough room to alter or rescind the rights conferred to a third party by giving the beneficiary at the same time enough protection if he has already achieved a particular status in which he has a secured right.

B. THE APPROACH TO THIRD PARTY RIGHTS IN GERMAN LAW

I. Historical Outline

Classic Continental Roman law granted no independent right to a third party who was a stranger to a contract. However, a few exceptions were admitted in the post- classical law of the Empire, for example in cases where a person made a gift on condition that the donee did some- thing for a third party. In such cases the third party was given an actio utilis against the donee; contracts for the benefit of third parties were thus recognised.^[38] Indeed, the Prussian General Law of 1794, which prevailed in the old Prussian territories of Germany until the German Civil Code (Bürgerliches Gesetzbuch - BGB) came into force on 01 January 1900, adhered to these principles as it formulated in - 74 I 5 that “a contract may have as its object the benefit of a third party.”^[39] It was controversial within the First Law Commission which started working on a draft of the BGB in 1847,^[40] as to whether one should follow the approach of the Prussian Land Law. A wide vari- ety of theories using already existing legal instruments were proposed to give reasons for the third party’s independent claim. Eventually, influenced by one of the leading members of the Law Commission, Bernhard Windscheid, the view that the contractual will of the parties was [1944]Ch. 83; Ross v. Caunters[1980]Ch. 287.

Scruttons Ltd. v. Midland Silicones Ltd [1962]A.C. 446. Swain v. Law Society[1983]1 A.C. 598 The Havprins[1983]2 Lloyd’s Rep. 356. Tomlinson v. Gill[1756]Amb. 330. Tweddle v. Atkinson[1861]1 B. & S. 393. Watteau v. Fenwick[1893]1 Q.B. 346. White v. Jones[1995]2 A.C. 207.

Williams v. Baltic Ins. Co.[1924]2 K.B. 282.

Woodar Investment Development Ltd. v. Wimpey Construction (UK) Ltd.[1980]1 All.E.R. 571 Yaxley v. Gotts[1999]3 W.L.R. 1217.

PUBLICATIONS OF THE LAW COMMISSION

Law Commission Consultation Paper Privity of Contract: Contracts for the Benefit of Third Parties (1991) L.Com.C.P. No. 121.

Law Commission Report Privity of Contract: Contracts for the Benefit of Third Parties (1996) Cm. 3329.

TABLE OF STATUTES

Note:

A collection of translations of various German Acts and Statutes in English is available at the website of the German Law Archive under >http://www.iuscomp.org/gla/index.html<.

Bürgerliches Gesetzbuch (BGB) - the German Civil Code as amended. (For the relevant provision on third party rights in the German Civil Code see Appendix.)

Contracts (Third Party Rights) Act 1999.

[...]

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^[1] When referring to English law in this paper, the respective reference shall of course include the law of Wales.

^[2] UNIDROIT International Institute for the Unification of Private Law, Principles of International Commercial Contracts, Rome, 1994; hereinafter UNIDROIT Principles.

^[3] Treitel, G.H., The Law of Contract (10th ed. 1999, Sweet and Maxwell) at p. 1.

^[4] In German law such contracts are called “contracts for the benefit of third parties,” a legal term which is not used in English Law. However, the legal terms “promisor,” “promisee” and “beneficiary” are used with the same meaning in English as well as in German law.

^[5] Treitel, G.H. supra note 3 at p. 540.

^[6] In Dutton v. Poole[1678]2 Lev. 210. and Martyn v. Hind[1776]Cowp.437 at 443 the claim of the third party was affirmed.

^[7] The third party’s claim failed for example in Crow v. Rodgers[1724]1 Str. 592 and Bourne v. Mason[1669]1 Ventr.6.

^[8] [1861]1 B. & S. 393.

^[9] Dunlop v. Selfridge[1915]A.C. 847 at p. 853.

^[10] [1968]A.C. 58.

^[11] Treitel, G.H. supra note 3 at p.545.

^[12] Cf. Bridge, M. “The Contracts (Rights of Third Parties) Act 1999”[2001]5 E.L.R. 85 at p. 86. The theoreti- cal question as to whether the rule that consideration must move from the promisee and the doctrine of privity of contract are distinct or whether they are merely variations of a common theme, shall not be discussed here. On this issue see Furmston, M. Cheshire, Fifoot & Furmston’s Law of Contract (14th ed. 2001, Butterworths) at p.86 et seq.

^[13] Treitel, G.H. supra note 3 at p. 63.

^[14] Treitel, G.H. supra note 3 at p. 76.

^[15] Supra note 9.

^[16] Only some exceptions will be mentioned for comparative purposes. The list does not claim to be exhaustive.

^[17] Watteau v. Fenwick[1893]1 Q.B. 346.

^[18] Pople v. Evans[1969]2 Ch. 255; The Havprins[1983]2 Lloyd’s Rep. 356 at 362.

^[19] [1756]Amb. 330.

^[20] For example: Gregory and Parker v. Williams[1817]3 Mer. 582; Lloyd’s v. Harper[1880]16 Ch.D. 290.

^[21] Les Affréteurs Réunis, S.A. v. Leopold Walford (London) Ltd.[1919]A.C. 801.

^[22] Cf. Furmston, M. supra note 12 at pp. 504 and 506.

^[23] For example Re Schebsman, Official Receiver v. Cargo Superintendents (London) Ltd. and Schebsman[1944]Ch. 83; Green v. Russell[1959]2 Q.B. 226; for discussion see Furmston, M. ibid. at. p.505.

^[24] Zweigert, K. and Kötz, H., An Introduction to Comparative Law (3rd ed. 1998, Oxford University Press) at p.467.

^[25] That was the position of Lord Denning and Lord Justice Danckwerts in the Court of Appeal’s decision in that case,[1966]Ch. 538.

^[26] [1968]A.C. 58 at pp. 105 et seq.

^[27] Cf. Treitel. G.H. supra note 3 at p.614.

^[28] [1924]2 K.B. 282.

^[29] Cf. Bridge, M. supra note 12. at p. 85.

^[30] Lord Diplock in Swain v. Law Society[1983]1 A.C. 598 at p. 611. Further examples are the critical voices of Lord Scarman in Woodar Investment Development Ltd. v. Wimpey Construction (UK) Ltd.[1980]1 All.E.R. 571 at p.590 and Lord Justice Steyn in Darlington Borough Council v.Wiltshier[1995]3 All.E.R. 895 at p. 903.

^[31] Law Commission Consultation Paper Privity of Contract: Contracts for the Benefit of Third Parties (1991) L.Com.C.P. No. 121.

^[32] Law Commission Report Privity of Contract: Contracts for the Benefit of Third Parties (1996) Cm. 3329.

^[33] It is worth to note, that such reports which accompanied the legislative process may now be used by courts to assist in interpretation of the Act. Clark L.J. suggested this in Yaxley v. Gotts[1999]3 W.L.R. 1217, 1232: “Where the statute has been enacted as the result of the recommendations of the Law Commission, it is both ap- propriate and permissible for the court to consider those recommendations in order to help to identify the mis- chief which the Act is designed to cure and the public policy underlying it.” Reliance on such documents is a novelty for English courts and appears to be part of a new trend towards a more continental approach to con- struction in English law.

^[34] Supra note 29 Ibid.

^[35] Cf. Furmston, M. supra note 12 at p. 501.

^[36] Cf. Andrews, N. “Strangers to Justice no longer: The Reversals of the Privity Rule under The Contracts (Rights of Third Parties) Act 1999”[2001](60)2 C.L.J. 353 at p.354.

^[37] Cf. Furmston, M. supra note 12 at p. 514.

^[38] Cf. Zweigert, K. and Kötz, H. supra note 24 at p.457.

^[39] Ibid. at p. 458.

^[40] For a detailed illustration of the history of the codification of German law which lead to the German Civil Code cf. Zweigert, K. and Kötz, H. supra note 24, chapters 10 and 11.