Avraamides v Colwill - 2006

Avraamides v Colwill [2006] EWCA Civ 1533

Contract – Agreement – Contract terms – Liabilities -Third parties

Facts:

Avraamides contracted Bathroom Trading Company (BTC) to complete two bathroom refurbishments. BTC was later sold to Colwill. Under the contract for sale, there was a term that stipulated that any prior or outstanding bathroom orders would completed by BTC. The bathrooms were not completed to a satisfactory standard, so Avraamides brought action against Colwill (as the transfer had occurred by this stage). Colwill relied on the transfer agreement between themselves and BTC, claiming that all liability passed to BTC. The court found that Avraamides was a third party to the transfer agreement but purported to confer a benefit under the Contracts (Rights of Third Parties) Act 1999 and that Colwill were liable to Avraamides.

Issues:

Whether Avraamides could claim a breach of contract by Colwill under s 1(3) of the Contracts (Rights of Third Parties) Act 1999.

Held:

The appeal was allowed by Colwill under s 1(3) of the Contracts (Rights of Third Parties) Act 1999. The contract did not mention the third party by name or class and that it was a requirement for a third party to be expressly identified in the contract by name. It was not sufficient to rely on an inference as the use of the term “express” within the section clearly meant that there must be a name referred to within the contract. The original agreement between Avraamides and BTC did not identify a third party, even though both parties fought the appeal on the basis that there was a clear inference of a third party, given the fact that there was a transfer agreement between BTC and Colwill. The wording of the statute was upheld. Therefore, Avraamides claim did not succeed.