SP Bill 5A Session 5 (2017) 2 Contract (Third Party Rights) (Scotland) Bill (4) A person may acquire a third-party right to enforce or otherwise invoke an undertaking despite the fact that— (a) the undertaking may be cancelled or modified, (b) there has been no delivery, intimation or communication of the undertaking to the 5 person. (5) The reference in section 1(1)(a) to an undertaking to do something includes an undertaking to indemnify a person. (6) The reference in section 1(1)(a) to an undertaking not to do something includes an undertaking— 10 (a) not to hold a person liable in a matter, (b) not to enforce, or not to enforce in full, a person’s liability in a matter. (7) This Act is without prejudice to any other enactment, or rule of law, that imposes requirements which must be fulfilled if an enforceable obligation is to be created. 3 Contracting parties’ freedom to alter third party’s entitlement 15 (1) An undertaking contained in a contract which has given rise to a third-party right may be cancelled or modified by the contracting parties. (2) Nothing in this Act precludes a contract from providing that an undertaking, which is contained in the contract and in relation to which a third-party right has arisen, will not be cancelled or modified by the contracting parties. 20 (3) Subsection (1) is subject to sections 4 to 6. 4 Protection of third party’s entitlement from retroactive change (1) No account is to be taken of the cancellation or modification of an undertaking contained in a contract where and in so far as the undertaking is being enforced or otherwise invoked— 25 (a) by virtue of a person’s third-party right to do so, and (b) in consequence of something happening or not happening prior to the undertaking being cancelled or (as the case may be) the modification being made. (2) Subsection (1) does not apply in relation to a cancellation or modification if the contract provided that it may be made with retroactive effect. 30 5 Protection of third party’s entitlement after notice given (1) Subsection (2) applies (subject to subsections (3) and (4)) where— (a) a person who has a third-party right arising from an undertaking contained in a contract is given notice of the undertaking by a contracting party, and (b) the undertaking is subsequently cancelled or modified. 35 (2) No account is to be taken of the cancellation or (as the case may be) modification of the undertaking when it is being enforced or otherwise invoked by virtue of the third-party right.