Bank Notes

C - Contracts (Rights of Third Parties) Act 1999

21/12/15

ROYAL BANK OF SCOTLAND PLC v MCCARTHY [2015] EWHC 3626 (QB)

The defendant was liable to repay a bank loan. The court reviewed the applicable principles for claims of inducing a breach of contract [71]. The court rejected the defendant’s defence that the bank had induced an LLP of which he had been a member to breach its contract with him by failing to repay his loan with the bank. Although the bank had required the LLP to enter into an undertaking not to repay the capital of any retiring member without the bank’s consent, on the evidence no request had been made for consent and the bank had been justified in acting as it did. Nor was the defendant entitled to enforce a letter of undertaking given by the LLP to the bank. The letter did not contain a term purporting to confer a benefit on the defendant within the meaning of the Contracts (Rights of Third Parties) Act 1999. No term could be implied into the loan agreement that the bank would not prevent a third party (the LLP) from performing any obligations which it owed the defendant, nor was there any relevant collateral contract.