In the realms of Hong Kong contract law, one of the key developments in 2015 is likely to be the introduction of a new Contracts (Rights of Third Parties) Bill (the “Bill”) which is expected to come into force as law in December 2015. Clients should see the introduction of the Bill as a positive step to bring Hong Kong in line with other common law jurisdictions and bring flexibility to the existing doctrine of privity of contract.
Once in force, a third party to a contract will be able to enforce rights under it as though they were a named party to it if the contract contains an express term to that effect, or if the contract purports to confer a benefit on that third party. However, the parties to the contract will be free to contract out of the provisions of the new law by express terms.
The Bill will not have retrospective effect and will not apply to contracts that were entered prior to its coming into force as law. However, we recommend that clients familiarise themselves with the new rules and bear them in mind when concluding any new contracts going forward. In particular, due to the risk of third party rights being implied under contract, we strongly recommend that parties either confer or exclude third party rights in clear, express terms.