A contract will be concluded and the contracting parties want a third party to be able to take legal action if the contractual promise is not kept. This person is considered a third party beneficiary. In other words, if a contract results in benefits for the third party, it becomes a third party beneficiary with the power to perform the contract. When a contract is performed, any person who can benefit from the contract does not have the right to take legal action as a third party beneficiary. These persons are designated as secondary beneficiaries and have no rights to the contract. In court, it would be found that the beneficiary does not have locus standi in the event of breach of contract. Counsel for the employer may argue that the contractor participated in the ”drafting phase” of an agreement with a third party. Although the contractor with regard to the attached technical documents, for example It is rare that it has been involved in the negotiation and drafting of legal and operational provisions. Another example is obtaining all necessary consents, an obligation of the tenant, which is usually included in every modification license. The contractor must be very careful to check exactly what promises he makes to the employer/tenant under a third party`s agreement in relation to his obligations under the construction contract. This may be a classic case of backdoor obligations.
For example, the construction contract may be completely silent on who should receive the building permit. Alternatively, the construction contract may provide that the contractor`s obligations are simply to assist the employer in obtaining all the necessary permits, but it is the employer`s responsibility to actually obtain them. If the modification license indicates that the tenant is absolutely obliged to obtain the necessary permits for the execution of the work (e.B. building permit, assignment of party walls, etc.), which will often be the case, the contractor assumes this obligation on the basis of the clause on third-party contracts, as if it were directly specified in the construction contract. The employer/tenant can then simply refer to this clause and say that since this obligation concerns the execution of the work, it will be included in the construction contract and will represent the risk of the contractor. The situation may be aggravated if the modification permit also provides that the owner is relieved of any liability for not obtaining consent, approval or license, etc. If the tenant/employer decides to go ahead or not to go ahead before obtaining the building permit, any enforcement action taken by the planning authorities will be the responsibility of the contractor. In fact, the opposite should happen – the contractor should demand compensation from the employer or tenant in case they ask the work to continue without having received any planning. An assignment refers to a person who is a party to a contract (the assignor) who transfers his or her rights to another person called an assignee. The assignee may continue the contract directly against the person designated as assignor. The customer of the contract is called the debtor.
There are basically no formal requirements for an assignment unless there is a law with specific requirements. If a word in the contract indicates the intention to transfer rights, this is sufficient to justify an assignment. Although guaranteed warranties tend to be the preferred option, third-party rights are becoming increasingly popular as they can be incorporated into construction contracts, subcontracts, etc. with a simple notification. Avoid the need to develop detailed supplementary agreements. The administrative exercise of organizing collateral collateral guarantees can be considerable and sometimes cost more money and time than their real value. We regularly produce newsletters, articles and articles to keep our clients and other stakeholders informed of the latest developments and debates in construction and energy law. You can browse some of our latest documents here or sign up for our monthly posts below to get them straight to your inbox. Just as we should never advise in a vacuum without understanding the details of a contract (i.e.
where it is located, what is being built, is it a high risk or a factory run, etc.?) and the impact that these specific factors can have on the execution of the work in practice, so that agreements with third parties do not have to be negotiated and agreed in isolation. Without consultation with contractors and/or construction specialists, little or no thought can be given to how these agreements relate to the contractor`s obligations under the construction contract and the reality of the performance of the work in practice. In the case of a construction project, the contractor`s contractual relationship consists of the construction contract only with the employer. However, in most construction projects, there will be other third parties who will have an interest in the terms of the construction contract, how the work is done and/or the final product. As a general rule, they do not have a contractual relationship with the contractor under the construction contract and, therefore, if they suffer losses as a result of an act or omission of the contractor, they cannot seek an appeal claiming damages for breach of contract. Therefore, both third parties and the employer will want to ensure that their interests in the works are protected so that they have a remedy in case of losses. This practice note examines third parties who are generally interested in construction projects and how their interests are generally protected. It examines how an employer can attempt to meet its obligations under agreements with third parties (p.B. Financing Agreements, Leases and Planning Agreements) as part of the construction contract. It also examines how the interests of third parties can be protected by ancillary guarantees, third-party rights and the granting of other rights under the construction contract.
In the event that the insurance company refuses to pay in accordance with the terms of the contract, it has the right to take legal action against the insurance company. This action can be brought even if the person was not a party to the contract. The Contracts (Rights of Third Parties) Act 1999 preserves the consistency of rights, i.e. . . .