Scots law has always recognised that a contract can create an enforceable right in favour of a third party. This is known as a jus quaesitum tertio (JQT). The Scottish position is in contrast to the position in England and Wales, where, before the introduction of the Contracts (Rights of Third Parties) Act 1999, the doctrine of privity meant that only the contracting parties could have rights arising out of their contract.
Despite the existence of a JQT, case law has created onerous requirements for its application, including a requirement that the right in favour of the third party must be irrevocable. Consequently, JQTs have not proved that useful on Scottish building contracts
Following recommendations made in July 2016 by the Scottish Law Commission (Report No 245), the Contract (Third Party Rights) (Scotland) Act 2017 came into force on 26 February 2018. It enables third parties to enforce contract undertakings made for their benefit. Parties can choose whether to exclude third party rights from their contract but it is expected that collateral warranties (although no longer needed) will still be used in Scottish construction projects. At present, it is unclear whether third parties will be able to adjudicate.