Facts
Mr and Mrs Avraamides contracted with Bathroom Trading Company (Putney) Ltd to refurbish two bathrooms. They sued Colwill and Martin, who had taken over the business, seeking to hold them personally liable for defective work. The buyers’ agreement with the company’s shareholders included a promise to pay liabilities properly incurred by the company by 31 March 2003. The county court held that the claimants could enforce that promise.
Issue
Were the claimants entitled to enforce the buyers’ promise under the Contracts (Rights of Third Parties) Act 1999?
Decision
The Court of Appeal allowed the buyers’ appeal. Under section 1(3) of the 1999 Act, a third party must be expressly identified by name, by membership of a class or by description. The relevant promise did not expressly identify the claimants in any of those ways. The reference to customers in the separate promise to complete outstanding orders did not identify the beneficiaries of the promise to pay liabilities.
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The court therefore held that Mr and Mrs Avraamides could not enforce the promise against Colwill and Martin. The decision concerned the business transfer agreement, which was separate from the original refurbishment contract.
Source: Full judgment
