Glossary
Third-party rights
third-party rightsThird-party rights are the ability of someone who did not sign to enforce a term. The default common-law rule is privity. The Contracts (Rights of Third Parties) Act 1999 creates a limited exception. Commercial drafts usually exclude the Act, then grant a named right to a specific affiliate, funder or end client where one is actually needed.More in the glossary are the ability of someone who did not sign to enforce a term. The default common-law rule is privity of contractPrivity of contract means only the parties can sue on the bargain. The Contracts (Rights of Third Parties) Act 1999 s.1 lets a named third party enforce a term that benefits them, unless the contract says otherwise. Most commercial papers exclude the Act. A subcontractor cannot sue the end client without a warranty or a 1999 Act right.More in the glossary. The Contracts (Rights of Third Parties) Act 1999 creates a limited exception. Commercial drafts usually exclude the Act, then grant a named right to a specific affiliate, funder or end client where one is actually needed.
Last updated 28 October 2026
This is the practical half of privity of contract. The 1999 Act s.1 is useful when you want an end client to enforce confidentialityConfidentiality is a promise to keep shared information private and to use it only for the agreed purpose.More in the glossary or a funder to enforce an IP assignment, without making them a party. It is a nuisance when “any group company” can later sue on a clause you wrote for one brand.
The boilerplate exclusion is the default on Contracts.io. Lex will open a named door if you ask for one: “The End Client named in scheduleA schedule is an annex to the contract that holds the detail: fees, dates, deliverables, service levels. It is part of the agreement if the main body says so. An order-of-precedence line should say what happens if the schedule and the clauses collide. Swap a schedule only by the variation method the contract names.More in the glossary 1 may enforce clause 8 (confidentiality).” Everyone else stays out. The parties should also say whether they can vary that clause without the third party’s consent.
Should we exclude the 1999 Act?
Yes, as the default. Silence leaves s.1(1)(b) alive: a term that “purports to confer a benefit” on someone can be enforced by them unless you showed a contrary intention. A one-line exclusion restores privity. Then grant the exceptions you actually want.
When would we give a named third party a right?
When an affiliate will use the work, a funder needs step-in, or an end client must enforce secrecy. Name the person, the clause, and whether the parties can vary it without them. Do not give them the whole contract, and do not let them rewrite the liability cap.
Is this the same as an indemnity in their favour?
No. An indemnity is a promise between the parties. A 1999 Act right lets the outsider sue on that promise. You can have an indemnityAn indemnity is a promise to cover another party's losses arising from a particular event or claim.More in the glossary without a third-party right — only the named party can then enforce it. Say which you mean.
Can we vary the contract after granting a right?
Section 2 of the Act protects a third party whose right has crystallised. If you want to keep the freedom to vary, say the parties may amend or rescind without the third party’s consent. Otherwise you may need their signature on a later addendum.
A worked example
A studio’s MSA excludes the 1999 Act, except that the brand named on the SOW may enforce the confidentiality clause. The brand is not a party and cannot sue for late delivery. When the brand’s parent later claims the same right, the exclusion stops them. If the studio and the client want to loosen confidentiality, the MSA says they may do that without the brand’s consent.
How it shows up in a contract
Sample wording · our own drafting
Except as in this clause, a person who is not a party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce this agreement. [Named person] may enforce [clause]. The parties may vary or rescind this agreement without that person's consent. This clause does not make that person a party.
In Plain English
Outsiders cannot sue on this contract. One named person may enforce one named clause. You can still change the rest of the deal without them. They are not a party.
Common mistakes
- Leaving the Act on by silence.
- Granting “any affiliate, anywhere” a right to enforce every clause.
- Forgetting s.2: a crystallised third-party right can block a later addendumAn addendum is a short, written change to an existing contract, signed by both sides so the original terms stay the same except for what the addendum updates.More in the glossary.
- Thinking a third-party right is the same as a novation or an assignment.
What the legislation says
A person who is not a party can enforce a term if the contract expressly says so, or if the term purports to confer a benefit on them, unless the contract shows the parties did not intend that. Contracts commonly exclude this right.
Source: Contracts (Rights of Third Parties) Act 1999, s.1Checked 7 October 2026Pending lawyer review
Sources
- Contracts (Rights of Third Parties) Act 1999, s.1Checked 7 October 2026Pending lawyer review
Frequently asked questions
What are third-party rights in a contract?
The ability of someone who did not sign to enforce a term. The 1999 Act creates a limited exception to privity. Most commercial papers exclude it.
Should we exclude the 1999 Act?
Yes, as the default, then grant a named right where you need one. Silence leaves s.1(1)(b) alive. See /glossary/privity-of-contract.
When would we give a named third party a right?
When an end client, affiliate or funder must enforce a specific clause — usually confidentiality or IP. Name the person and the clause.
Is this the same as an indemnity in their favour?
No. An indemnity is a promise between the parties. A 1999 Act right lets the outsider sue on a term. See /glossary/indemnity.
Related
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The legal wording governsLast reviewed 28 October 2026Pending lawyer review