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Contracts (Rights of Third Parties) Act 1999

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2 Variation and rescission of contract.E+W+N.I.

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(1)Subject to the provisions of this section, where a third party has a right under section 1 to enforce a term of the contract, the parties to the contract may not, by agreement, rescind the contract, or vary it in such a way as to extinguish or alter his entitlement under that right, without his consent if—

(a)the third party has communicated his assent to the term to the promisor,

(b)the promisor is aware that the third party has relied on the term, or

(c)the promisor can reasonably be expected to have foreseen that the third party would rely on the term and the third party has in fact relied on it.

(2)The assent referred to in subsection (1)(a)—

(a)may be by words or conduct, and

(b)if sent to the promisor by post or other means, shall not be regarded as communicated to the promisor until received by him.

(3)Subsection (1) is subject to any express term of the contract under which—

(a)the parties to the contract may by agreement rescind or vary the contract without the consent of the third party, or

(b)the consent of the third party is required in circumstances specified in the contract instead of those set out in subsection (1)(a) to (c).

(4)Where the consent of a third party is required under subsection (1) or (3), the court or arbitral tribunal may, on the application of the parties to the contract, dispense with his consent if satisfied—

(a)that his consent cannot be obtained because his whereabouts cannot reasonably be ascertained, or

(b)that he is mentally incapable of giving his consent.

(5)The court or arbitral tribunal may, on the application of the parties to a contract, dispense with any consent that may be required under subsection (1)(c) if satisfied that it cannot reasonably be ascertained whether or not the third party has in fact relied on the term.

(6)If the court or arbitral tribunal dispenses with a third party’s consent, it may impose such conditions as it thinks fit, including a condition requiring the payment of compensation to the third party.

(7)The jurisdiction conferred on the court by subsections (4) to (6) is exercisable[F1in England and Wales by both the High Court and the county court and in Northern Ireland ] by both the High Court and a county court.

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F1Words in s. 2(7) inserted (22.4.2014) by Crime and Courts Act 2013 (c. 22), s. 61(3), Sch. 9 para. 71; S.I. 2014/954, art. 2(c) (with art. 3) (with transitional provisions and savings in S.I. 2014/956, arts. 3-11)

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