Dolphin Maritime & Aviation Services Ltd v Sveriges Angfartygs Assurans Forening (The Swedish Club) [2009]

Court: High Court

Facts: Dolphin Maritime, acting on behalf of an insurer, was tasked with recovering cargo after a collision. They issued a Letter of Undertaking (LOU) to The Swedish Club, specifying payment conditions. However, the insurer settled directly with The Swedish Club, bypassing Dolphin Maritime. Dolphin Maritime claimed breach of the LOU.

Issue: Whether Dolphin Maritime could enforce the LOU as a third party under the Contracts (Rights of Third Parties) Act 1999.

Held: The court denied Dolphin Maritime's claim. The LOU did not purport to benefit Dolphin Maritime as a third party. For a term to confer a benefit under the Act, benefiting the third party must be one of the primary purposes of the contract, not just incidental.

Key Judicial Statement: Christopher Clarke J stated that to "purport to confer a benefit" under the Contracts (Rights of Third Parties) Act 1999, the contract must aim to benefit the third party as a principal purpose, not merely as an incidental effect.

💡 Leveluplaw: This case highlights that for third parties to enforce contract terms, the contract must clearly intend to benefit them, rather than just incidentally. It's crucial for third parties to ensure that their rights and benefits are explicitly stated in agreements to avoid such disputes.