To any Member of Parliament willing to oppose the Third Reading of the Contracts (Rights of Third Parties) Bill.

Dear Sir or Madam,

I beg your pardon for writing at such a late stage in the proceedings concerning the Bill. I had hoped to attract the attention of a member of the Committee, to which it was committed. Eventually, I found that I had been watching the wrong page on the "Internet" for keeping track of the Bill's progress. At the same time I gained the impression and, until yesterday, I believed that the Bill required only the Royal Assent before passing into law. However, yesterday I saw on "Ceefax" that the House of Commons is to debate it again tomorrow. Accordingly I hope that it is not too late to preserve the common law on privity of contract.

In his First Institute at 97b Lord Coke said,

Coke is clearly of the opinion that the last sentence is as true of any one generation as of any one man. He is supported by Sir Owen Dixon's observation that, once the common law is supplanted by an Act of Parliament, the repeated direct or indirect amendment of the latter invariably and disproportionately occupies much of the time of future parliaments. Indeed (as I heard last April) this supplanting may so provoke an electorate as to lead to the movement in California for the wholesale repeal of that State's statutes. Of course, legislative provision for such useful innovations as registration of title and of companies is welcome. Of course, by its very nature, democracy may require changes in the law to adapt its policy to shifts in dominance from one section of society to another and back again. Nevertheless, because of its unforeseen effects, all reform of the law simply to conform to one person or one group's a priori view of what is necessary to give the law logic, convenience or consistency is dangerous: Williams v. Britannic Merthyr Steam Coal Co. (1924) 40 T.L.R. 687 at 688(1) per Rowlatt, J., and Mongomery, Q.C. This is especially true when one is introducing notions from an alien system: Sharp v. Thomson [1995] Times Law Reports 439 ("The Times" 25/7/95). Derogation from the principle of privity of contract would be as alien to England as the introduction of floating charges was to Scotland; for in this country the application of the principle is universal. Allegations of the judges' "ingenuity in inventing exceptions" are false, including (if I may respectfully say so) those made by Lord Steyn in (1997) 113 Law Quarterly Review 433 at p.436.

On the other hand and as exemplified in Beswick v. Beswick [1968] Appeal Cases 58, the requirement of privity of contract does not prevent a contracting party from obtaining a decree of specific performance of his contract for the benefit of a third party. This facility does not derogate from the doctrine, because breach of contract is actionable without proof of damage and equity will grant its own peculiar remedies at the suit of an injured party when the damages available at law (including nominal damages) do not afford that party adequate relief. Nor does the doctrine impede anyone from enforcing a contract made on his behalf by his agent or trustee. In the case of agency this is because he who acts through an agent is deemed to act in person. Trusts are relevant because the benefit of a contract is a chose in action and, as such, is a species of property as much capable of being held on trust, as is any other. Likewise, being a proprietary interest, the benefit of a contract is capable of being assigned to another by the promisee.

Agency, property and trusts are concepts of the Laws of England, which have a standing equal to that of contracts. Accordingly, the law of contracts must and does interact with them, so as to allow all four to operate in their proper spheres. The propriety of allowing a particular situation to be the sphere of one concept, rather than another, is generally contingent on the intentions of the parties. Naturally, a lawyer's life is easier when the parties express their intentions. Nonetheless he must be alert to implications, including those wrought by the maxim quoted in Coke's same Institute at 36a, "benignae faciendae sunt interpretationes cartarum propter simplicitatem laicorum ut res magis valeat quam pereat" [on account of the ignorance of the laity, their instruments must be construed benignly, so that their object may prevail rather than fail]. Doubtless, in the construction of a contract, this must sometimes lead to the inference of an agency in its making (McEvoy v. Belfast Banking Co. [1935] Appeal Cases 24) or a trust of its benefit (Fletcher v. Fletcher (1844) 4 Hare 67). Yet, at others, such a finding will be inhibited by the conflict between the rights of a third party and one of the prides of English Law: freedom of contract. While contracting parties are generally free to rescind or vary their contract, he who is deemed to contract as an agent or trustee forgoes this liberty. Nothing in the Law Commission's proposals for fewer restrictions in English Law on the enforcement of contracts for the benefit of third parties, satisfies me as a convenient solution of this conflict. However, by insisting that in the absence of clear convenience or clearly necessary implication to the contrary, the parties to an agreement must be deemed to have intended to preserve their freedom of contract, including their freedom to rescind or vary their agreement, the common law avoids the conflict.

In short: the problems identified by the Law Commission are at most theoretical, having had no actual detrimental effect on those subject to the law of England; yet the Law Commission's proposed solutions will open an abyss; for no one can predict their effect, in particular, the inevitable harm which they will work. I therefore respectfully, yet earnestly, urge the rejection of the Bill based on those proposals and to preserve, in this area at least, that "perfection of reason" which, according to Coke (loc. cit.), is the common law and which "cannot suffer anything that is inconvenient".

Yours faithfully,

Gordon Goldberg.