The rights of third party beneficiaries under contract : a historical review in the light of recent developments

Abstract

Notwithstanding the principle of relativity of contracts, which contemplates that a contract cannot give rise to any rights or obligations to third parties, various legal systems have introduced exceptions to this rule. The principle of relativity of contracts can bring about severe and controversial effects, in that it prevents third parties from enforcing rights that appear to have been granted to them in contracts. This thesis sets out to explore the position within the several "Civil law" and "Common law" European countries regarding the development taking place therein with respect to the real exceptions to the well established principle of relativity of contracts, in so far as benefits are concerned. Due to the fact that the situation until 1964 has already been tackled elsewhere, my review of the real exceptions that were introduced until 1964 is principally intended to serve as a basis for my review of more recent developments in this area. However, one cannot tackle the subject without briefly referring to the apparent exceptions, particularly so because it is essential for the reader to be able to decipher the difference between the apparent and the real exceptions. Throughout the thesis, it will become evident that it is fundamental that in certain situations the third party will be allowed to enforce a contract by virtue of which the latter would have been conferred rights by the contracting parties themselves. In fact, in view of this, the thesis shall outline the development that has taken place also within the Maltese system. However in addition to this, the thesis shall also discuss the shortcomings of our law and of our judicial practice in this specific area of contract law. It shall critically examine certain confusing aspects of how our law relating to third party rights arising from contract is still being interpreted and make more suggestions for legislative reform to better safeguard third party rights in the light of the developments that have taken place particularly within those systems upon which our Civil Code was modelled.