Darlington Borough Council v Wiltshier Northern Ltd [1995] 1 WLR 68, 79
Contract – Building – Assignment – Building contracts for benefit of third party – Contractual rights assigned to third party
Facts
Wiltshier Northern Ltd (WNL) were hired to build a recreational centre for Darlington Borough Council (DBC) and entered into two contracts with a finance company. The agreement between WNL and the finance company stipulated that all rights and causes of action against WNL were assigned to DBC. DBC brought action against WNL for breaches of contract where no entitlement to damages was initially found to exist. DBC appealed.
Issue
Whether DBC as assignee to the contract was entitled to substantial damages for breach of contract.
Decision / Outcome
Appeal by DBC was allowed as when the building contracts were entered into, both parties knew that any foreseeable damage would cause loss to DBC and therefore the benefit of signing the contract in the first instance was to DBC. Thus, DBC was entitled to substantial damages for the loss caused by WNL, although they were to be assessed on a normal basis, as if DBC had been party to the contracts. Johnson v Agnew [1980] A.C. 367 was applied in that the general principle for the assessment of damages for a breach of contract is to compensate the plaintiff for any loss or damage arising from the contract. Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] A.C. 847 was distinguished in that, even though generally speaking, a third party cannot sue for damages on a contract they are not party to, DBC were entitled to recover loss as the rights were not only assigned, but the recreational centre was built for them specifically which made them entitled in consideration of the factual context of the case.
Updated 19 March 2026
This case summary remains broadly accurate. Darlington BC v Wiltshier Northern Ltd [1995] 1 WLR 68 is still a valid and frequently cited authority on the assignment of contractual rights and the recovery of substantial damages by an assignee. The principles described in the summary continue to represent good law.
However, readers should be aware of one significant development: the legal landscape surrounding third-party rights in contract has been materially altered by the Contracts (Rights of Third Parties) Act 1999. That Act, which came into force after this decision was handed down, allows third parties to enforce contractual terms in their own right where the contract expressly provides for this or where the term purports to confer a benefit on them (subject to the contracting parties not having indicated otherwise). The 1999 Act does not render Darlington obsolete — assignment cases and the principles discussed in the judgment remain relevant — but in many practical situations the 1999 Act now provides a more direct route to recovery for third parties, and students should consider both the common law position illustrated by Darlington and the statutory regime together. The article does not mention the 1999 Act, which is a material omission for a complete understanding of the current law.
The citations to Johnson v Agnew [1980] AC 367 and Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847 are accurate and those cases remain good law for the propositions cited.
