A new bill covering contracts that has been introduced into the House of Lords could be 'a legal nightmare' for construction, according to the Construction Industry Council.
The Contracts (Rights of Third Parties) Bill, introduced in December, reforms the law of 'privity of contract', whereby a contract can only be enforced by the parties to it. If the new Bill is enacted, third parties will also be able to enforce the terms of a contract, either if the contract expressly so provides or if the contract purports to confer a benefit. The cic says, 'This second limb is a major concern in construction, since rights can be conferred unwittingly.'
John Wright, who represents the riba on the cic's liability task force, said, 'We are pretty worried about it.' He said that, for example, a tenant of a building, using the building in a way that was not originally intended, could be entitled to take action against the original architect. 'We feel it is a recipe for even more bad feeling,' said Wright. 'It goes against the whole ethic of what Egan is trying to do - to get rid of contracts.'
Graham Watts, chief executive of cic, said, 'It cannot be right that everyone in construction should need a lawyer at their side whenever they enter into a contract; that is certainly not what Egan had in mind!'