First, third parties may be entitled to money, services or goods under a contract. A simple example would be that A agrees to buy a new laptop from B and asks B to deliver it to C, A`s daughter, who is studying in another province. If B does not provide the laptop, C as a third party does not have the right to sue B under the third-party beneficiary rule. Moreover, A cannot have a viable remedy against B. A may not have lost anything because B did not provide C with the laptop; therefore, if he had sued B, A might only be entitled to symbolic damages.2 In this case, C would wish to assert a right of affirmative action in the contract between A and B. Although the strict secrecy rule has drawn much criticism from academics, legal reform commissions and judges, it is still considered an established legal principle. Over time, however, legislators have reversed some of the most egregious decisions;3 they have also acted in cases where they anticipated the dangers of the rule, as in the case of life insurance.4 Judges have also recognized various “exceptions”.5 The traditional conception of a contract is that of a legally binding agreement between two private parties. who have voluntarily promised themselves something. Often, however, contracts involve third parties in one way or another. In the British common law tradition, the doctrine of contractual secrecy deals with the relationship of third parties to contracts to which they are not parties. In short, the doctrine states that treaties can only confer rights or impose obligations on contracting parties. Second, employees or contractors who are generally considered third parties may be entitled to a limitation of liability [end of page 269] or other contractual defense to a claim. For example, A contracts with B, a long-haul carrier, for the transportation of goods worth USD 500,000.

The contract between A and B limits B`s liability for negligent damage to the goods to $1,000. The driver of B, C, drives negligently and has an accident on the road; As a result, the goods are irreparably damaged. If B is sued by A, his liability for this damage would be contractually limited to $1,000. However, C, as a third party, would not be entitled to invoke the limitation clause and would be liable in tort for the entire USD 500,000. This ability to recover from C may compromise the ex ante allocation of risks between A and B, with A bearing the risk of damage in navigation. In that case, C wishes to raise a plea arising from the contract between A and B. Problematic situations arise when a contract between two parties is intended to give an advantage to a third party. In these situations, an element of the privacy doctrine that I will call the third-party beneficiary rule expressly deprives these third parties of any statutory rights.1 In case law, two factual scenarios have generally arisen. In this article, I will argue that these two different situations have been confusingly combined under the third-party beneficiary. In two cases, London Drugs Ltd. v.

Kuehne & Nagel International Ltd.6 and Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd.7, the Supreme Court of Canada confronted insurers who sued negligent “third parties” by subrogation. The Court was again faced with the difficult question of when to grant legally enforceable rights to third parties. In Iacobucci J., the Court created a new “principle” exception to the doctrine and subsequently extended it to allow third parties to benefit from exclusions or limitations of liability. Sorry, the preview is currently not available. You can download the document by clicking on the button above.