Download Bermuda's 2016 Act: Enforcing Contractual Terms by Third Parties and more Schemes and Mind Maps Construction in PDF only on Docsity!
F A T A E R^ N F
Q U O U T
BERMUDA
CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 2016
TABLE OF CONTENTS
Citation Interpretation Application Rights of third party to enforce contractual term Variation and rescission of contract Defences Enforcement of contract by promisee Protection of promisor from double liability Exceptions Supplementary provisions relating to third parties Arbitration provisions Assignment of third party right Regulations and orders
WHEREAS it is expedient to make provision for the enforcement of contractual terms by third parties in certain circumstances;
Be it enacted by The Queen’s Most Excellent Majesty, by and with the advice and consent of the Senate and the House of Assembly of Bermuda, and by the authority of the same, as follows:
Citation
This Act may be cited as the Contracts (Rights of Third Parties) Act 2016.
Interpretation In this Act, unless the context otherwise requires—
“arbitral tribunal” has the meaning assigned to that expression in section 2 of the Bermuda International Conciliation and Arbitration Act 1993;
“commencement date” means the date on which this Act comes into force;
“contract of employment” has the meaning assigned to that expression under section 3 of the Employment Act 2000; “Court” means the Supreme Court;
“employee” has the meaning assigned to that expression under section 4 of the Employment Act 2000;
“Minister” means the Minister responsible for economic development;
“set-off” includes netting of claims; “third party” means a person who is not a party to a contract.
In relation to a term of a contract which is enforceable by a third party—
“promisee” means a party to the contract by whom the term is enforceable against the promisor;
“promisor” means a party to the contract against whom the term is enforceable by the third party.
Application
This Act shall apply to any contract which, on or after the commencement date, includes terms which comply with section 4.
A contract (whenever made) may be amended to include terms which comply with section 4.
If, after this Act comes into force, a contract is amended to include terms which comply with section 4, a third party may only enforce a right which accrues on or after the date on which the contract is amended.
If, immediately before the commencement date, an existing contract includes terms which are in accordance with the provisions of section 4—
those terms shall be deemed to comply with section 4; but
a third party may only enforce a right which accrues on or after the commencement date.
In this section, “existing contract” means a contract that was entered into prior to the commencement date.
Rights of third party to enforce contractual term
Subject to this Act, a third party may in its own right enforce a term of a contract if—
the third party is expressly identified in the contract—
(a)
(b)
(a)
Where the consent of a third party is required under subsection (1) or (3), the Court or arbitral tribunal may, on the application of one or more of the parties to the contract, dispense with its consent if satisfied that it is just and equitable to do so having regard to all the circumstances.
The Court or arbitral tribunal may, on the application of one or more of the parties to a contract, dispense with any consent that may be required under subsection (1) (c) if it is satisfied that it cannot reasonably be ascertained whether or not the third party has in fact relied on the term.
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.
Defences
Subsections (2) to (5) apply where, in reliance on section 4, proceedings for the enforcement of a term of a contract are brought by a third party.
There shall be available to the promisor by way of defence or set-off any matter that—
arises from or in connection with the contract and is relevant to the term; and
would have been available to the promisor by way of defence or set-off if the proceedings had been brought by the promisee. There shall also be available to the promisor by way of defence or set-off any matter if—
an express term of the contract provides for it to be available to the promisor in proceedings brought by the third party; and
it would have been available to the promisor by way of defence or set-off if the proceedings had been brought by the promisee.
There shall also be available to the promisor—
by way of defence or set-off any matter; and
by way of counterclaim any matter not arising from the contract,
that would have been available to the promisor by way of defence or set-off or, as the case may be, by way of counterclaim against the third party if the third party had been a party to the contract.
Subsections (2) and (4) are subject to any express term of the contract as to the matters that are not to be available to the promisor by way of defence, set-off or counterclaim.
Where in any proceedings brought against a third party, such third party seeks in reliance on section 4 to enforce a term of a contract including, in particular, a term purporting to exclude or limit liability, it may not do so if it could not have done so (whether
(a)
(b)
(a)
(b)
(a)
(b)
by reason of any particular circumstances relating to it or otherwise), had it been a party to the contract.
Enforcement of contract by promisee
Section 4 does not affect any right of the promisee to enforce any term of the contract.
Protection of promisor from double liability Where under section 4 a term of a contract is enforceable by a third party and a promisee has recovered from the promisor a sum in respect of—
the third party’s loss in respect of the term; or
the expense to the promisee of making good to the third party the default of the promisor,
then, in any proceedings brought in reliance on that section by the third party, the court shall reduce any award to the third party to the extent it thinks appropriate to take account of the sum recovered by the promisee.
Exceptions Section 4 confers no rights on a third party in the case of a contract on a bill of exchange, promissory note or other negotiable instrument.
Section 4 confers no rights on a third party in the case of any contract binding on a company and its members under section 16 of the Companies Act 1981.
Section 4 confers no rights on a third party to enforce any term of a contract of employment against an employee.
Section 4 confers no rights on a third party in the case of—
a contract for the carriage of goods by sea;
a contract for the carriage of goods by road, or for the carriage of cargo by air; or letters of credit.
In subsection (4)—
“contract for the carriage of goods by sea” means a contract of carriage—
contained in or evidenced by a bill of lading, sea way bill or a corresponding electronic transaction; or under or for the purposes of which there is given an undertaking which is contained in a ship’s delivery order or a corresponding electronic transaction; and
“contract of carriage” in relation to—
(a)
(b)
(a)
(b)
(c)
(5)
(a)
(b)
on a proper construction of the contract, the right is personal to the third party and is not assignable.
Regulations and orders
The Minister may make such regulations as are considered expedient to give effect to the provisions of this Act.
The Minister may by Order amend or otherwise vary section 9.
Regulations or an Order made under this section shall be subject to the negative resolution procedure.
[Assent Date: 28 March 2016]
[Operative Date: 28 March 2016]
(b)
