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Review Your SQE 1 Practice Records

Examination Timing: 00H00M02S

Lionel agreed to purchase land from Daisy for £850,000, with £150,000 of this amount specifically allocated to be paid to Francesca. The contract identified Francesca by name and professed to confer a benefit on her. Lionel now refuses to pay Francesca. 

Is Lionel directly liable for his breach of promise to pay Francesca?

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Under the Contracts (Rights of Third Parties) Act 1999, a third party can enforce a term of a contract if the contract expressly provides that the third party may do so, or if the term purports to confer a benefit on the third party. In this case, the contract clearly identified Francesca and intended to confer a benefit on her. Therefore, Lionel's refusal to pay the £150,000 constitutes a breach of the contract, and Francesca is entitled to enforce the promise directly. This is supported by the case Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR 277, where the court recognized that a third party could enforce a benefit conferred upon them by the terms of the contract. 

Key Point: The Contracts (Rights of Third Parties) Act 1999 allows third parties to enforce contractual terms intended to benefit them, overcoming the traditional doctrine of privity. This legal framework ensures that parties who are explicitly intended to benefit from a contract can seek enforcement and remedies for breaches.

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