Contract (Third Party Rights) (Scotland) Act 2017 – What Is Changing?

What is this Act all about?

Sometimes, the parties to a contract intend that a third party (for example, another company or an individual) will be entitled to certain rights under that contract, even though they are not a party to the contract itself. Scottish law dealing with such rights was based on case law. The absence of a clear set of rules meant that the law was ambiguous and inflexible.

The Act replaces the old regime with a new statutory set of rules, which provides greater certainty as to how third party rights can be created and enforced.

Will the Act apply to all existing contracts?

No. The Act will come into force on 26 February 2018.

The new rules will apply automatically to all contracts which are formed on or after this date.

They will not automatically apply to contracts created before that date. But it's open to contracting parties to agree otherwise by putting something to that effect in a pre-existing contract.

The new Scottish third party rights regime is similar to, but differs in certain key...