Third party beneficiary in commercial lawThird party beneficiary in commercial law
Faculty of Law
Personal Rights and Property Rights
European journal of commercial contract law
(2012):2-3, p. 21-42
University of Antwerp
Many contracts confer in one or another way a benefit on persons who are not parties to the contract. Often those third parties will (try to) argue that they are entitled to claim that benefit. In most legal systems, the relationship between a contract and third parties is governed by the rule of privity of contract, which restricts the (binding) effects of contracts to the contracting parties. Exceptions to the rule that a contract cannot impose liabilities on a third party are very rare. It seems almost self-evident that a third party cannot be bound by a contract without his consent. However, the conferral of contractual benefits on a third party, without his consent, is more likely allowed, at least from the perspective of the third party. Probably the most important active exception to the privity rule is a stipulation in favour of a third party. It is a general and wide-ranging (and in many cases the only possible) exception to the privity rule which allows contracting parties to confer rights on a third party on the sole basis of their contract.3 Its relevance in practice is significant.