Lloyd’s v Harper (1880) 16 Ch D 290
Contract law – Banking and finance – Guarantor
Facts
A father wrote a letter to the managing committee of Lloyd’s, which held himself responsible for all of his son’s actions as an underwriting member of the business. At this time, Lloyds was a voluntary association that was governed by bylaws which provided that an individual could not be excluded from membership unless they declared bankruptcy or insolvency. The association specialised in marine insurance and incurred no liability for the policies that it had written. The society was later incorporated and they became governed by an Act of Parliament. In 1876, the father died and notice of this was given to Lloyds. Two years later, the son became bankrupt and ceased to be a member of Lloyds.
Issue
The court was required to establish whether the guarantee that the father provided on behalf of his son could still be enforced, after his death. If this was possible, the second issue was whether the father and his estate would be accountable for the son’s bankruptcy and the subsequent loss of membership. The son argued that since incorporation, Lloyd’s were not a party to the contract between the voluntary association and his father.
Decision/Outcome
The Court of Appeal found that the death of the father had not ended the guarantee he had provided for his son but this had simply moved to his estate which was now liable for the son’s actions. The court allowed Lloyd’s’ appeal as the corporation were trustees of the benefit that was previously agreed by themselves as a voluntary association and the father.
Updated 19 March 2026
This case summary accurately reflects the decision in Lloyd’s v Harper (1880) 16 Ch D 290. The case remains good law and continues to be cited as a foundational authority in contract law, particularly in relation to third party rights and the enforcement of guarantees. It is notably relevant to the historical development of what became the Contracts (Rights of Third Parties) Act 1999, which now provides a statutory framework allowing third parties to enforce contractual benefits in certain circumstances. The case itself predates that Act and the summary does not purport to address the modern statutory position, so readers should be aware that the law on third party rights has developed significantly since 1880. The principles described in the summary regarding continuation of a guarantee after the guarantor’s death, and the ability of a successor body to enforce a benefit as trustee, remain legally recognised. No subsequent case law or statutory change has overruled or materially altered the specific findings described.
