A new bill that changes the legal rights that individuals have when it comes to contracts has been published by the Cayman Islands Government and will be passed into law by mid-March.
The Contracts (Rights of Third Parties) Bill 2014 was gazetted on February 21. Currently, under common law, a person must be party to a contract in order to be able to enforce the provisions of that contract. This applies even where the parties clearly intended that a person who is not party to such contract be given rights under the contract.
The new law, when passed, will enable the parties to a contract which gives persons who are not direct parties to that contract the ability to enforce rights expressly granted to them in the contract, according to law firm Walkers in an advisory on the law.
“This is anticipated to be particularly helpful to enable indemnities in fund documents in favour of third parties to be enforceable without the need for a separate agreement,” said Walkers’ note.
It added that the law is very similar to the position in English law where parties can ‘opt in’ to its application.
“As with the English position, it will therefore be necessary to ensure that all Cayman Islands governed contracts going forward expressly apply or dis-apply the law depending on the intentions of the parties,” Walkers said.
Contracts Bill, government, Walkers