The Court of Appeal has held that a letter of instruction (“LOI”) between a bank and its customer conferred a benefit on third party investors. The third party investors (who were not customers of the bank) were held to be part of a sufficiently identified class in the LOI for the purpose of s.1(3) of the Contracts (Rights of Third Parties) Act 1999 (the “1999 Act”): Chudley & Ors v Clydesdale Bank plc [2019] EWCA Civ 344.

The key issue considered by the Court of Appeal was the level of identification required in order for a third party to establish that a contract conferred a benefit upon them which they could then enforce under the 1999 Act. Section 1(3) of the 1999 Act requires third parties to be “expressly identified in the contract by name, as a member of a class or as answering a particular description”. The Court of Appeal held that it was not necessary for the LOI to mention a third party investor by name, finding that reference to “a client account” in the LOI together with the name of the investment scheme was express identification of the class, namely clients of the bank’s customer who were investing in the scheme in question.