Privity of Contract

Hong Kong has been reviewing its privity of contract law.

Under existing law, a third party cannot acquire and enforce a right under a contract to which he is not a party. The Contracts (Rights of Third Parties) Ordinance was gazetted on 5 December 2014, following the passing of the Bill on 26 November 2014. The Ordinance will enable a third party to enforce a contract in some circumstances.

The Ordinance will come into effect on a date to be announced. The Department of Justice has indicated that the government is prepared to bring the Ordinance into operation one year after its passage so as to allow stakeholders to have sufficient time to make due preparations for the new legislative scheme.

Parties to contracts should carefully review their existing arrangements and consider whether to exclude the statutory provisions.