CIVIL LAW SECTION

Privity of Contract and Third Party Rights

REPORT OF THE WORKING GROUP

Readers are cautioned that the ideas or conclusions set forth in this paper, including any proposed statutory language and any comments or recommendations, may not have not been adopted by the Uniform Law Conference of Canada. They may not necessarily reflect the views of the Conference and its Delegates. Please consult the Resolutions on this topic as adopted by the Conference at the Annual meeting.

Quebec City, Quebec August 10-14, 2008

Acknowledgements

The preparation of this report involved the efforts of many individuals who provided direction and content by serving on the Uniform Law Conference of Canada Working Group on Privity of Contract, or who otherwise provided commentary or production assistance.

Working Group on Privity of Contract, Civil Law Section, Uniform Law Conference of Canada

  • Genevieve Tremblay-McCaig, Working Group Chair
    Legal Counsel, Alberta Law Reform Institute, Alberta
  • Tim Epp
    Crown Counsel, Legislative Services Branch, Department of Justice, Saskatchewan
  • Kim Graf
    Solicitor, Civil Law Branch, Alberta Justice, Alberta
  • Wayne D. Gray
    Partner, McMillan Binch Mendelsohn LLP, Ontario
  • Bert Kramar
    Solicitor, Civil Law Branch, Alberta Justice, Alberta
  • Peter J.M. Lown, Q.C.
    Director, Alberta Law Reform Institute, Alberta
  • Tim P.B. Rattenbury
    Solicitor, Law Reform/Office of the Attorney General, New-Brunswick

Table of Contents

Introduction

A. What is the Current Situation in Canada?

1. The Privity of Contract Doctrine

2. Statutory and Common Law Exceptions

  • a. Express Intention to Benefit a Third Party
  • b. Third Party as Contracting Party’s Instrument or Representative
  • c. Chain of Contracts
  • d. Rights and Obligations Follow the “Subject Matter”

3. Legal Devices Ousting the Privity of Contract Rule

  • a. Other Means of Circumventing the Privity Rule
  • b. Other Causes of Action

B. What Are the Possible Courses of Action?

1. Let the Common Law Take its Course

2. Legislative Intervention

a. Exceptions for Particular Situations
b. General Provision
c. Detailed Legislative Scheme
  • i) Enforceability of the Contract
  • ii) Identification of the third party
  • iii) Right of the Contracting Parties to Vary or Cancel
  • iv) Third party Rights Subject to the Terms of the Contract and other
  • Defences, Set-offs, Counterclaims and Remedies
  • v)Overlapping Claims
  • vi) Possibility to Expressly Contract Out
  • vii) Types of Contract to which a Reform would not Apply
  • viii) Existing Exceptions to the Privity Rule

C. Conclusions and Recommendations

Endnotes

Bibliography

Footnotes

Privity of Contract and Third Party Rights

Report of the Working Group

August 2008

Next Annual Meeting

2018 Conference (Centennial)

Delta Hotel

Québec City, QC

August 12 - 16, 2018