Avraamides and another v Colwill and another

Company — Refurbishment works — Respondent customer dissatisfied with standard of work — Company transferring assets and liabilities to partnership — Particular customer not expressly named in transfer agreement — Whether appellant partners responsible for work carried out by predecessor — Whether transfer agreement conferring benefit on third parties — Whether transfer entitling customer to pursue partners for defective works — Appeal allowed The respondents had entered into a contract with a limited liability company for the refurbishment of two bathrooms. The company was subsequently sold to a partnership in which the appellants were the partners. The respondents were dissatisfied with the work and commenced proceedings, seeking to hold the appellants liable for the work of their predecessor. Preliminary issues arose as to whether the respondents could be said to have contracted with the appellants for the installation of the bathrooms and/or whether the appellants owed a concurrent duty of care in tort to the respondents in respect of that installation.  The county court decided that the respondents’ contract was with the company and that the company was responsible for the works of refurbishment included in that contract. However, the judge found that the company’s assets had been transferred to the appellants and that the transfer agreement provided that the appellants undertook to complete outstanding customer orders and to pay any liabilities incurred by the company. Accordingly, the judge concluded that the respondents were third parties upon whom the transfer agreement had purported to confer a benefit to which the Contracts (Rights of Third Parties) Act 1999 applied.       The appellants appealed. The principal issue was whether the Act applied, bearing in mind section 1(3), which required the third party to be expressly identified in the contract by name, as a member of a class or as answering a particular description.   Held: The appeal was allowed. Section 1(3) of the 1999 Act, by use of the word “express”, did not allow any process of construction or implication. The section was concerned with the benefit conferred on a third party, and with the identification of that person. The transfer agreement did not identify any third party or class of third parties. Had the respondents been able to rely upon the fact that customers were identified in the contract as beneficiaries of the first part of the third paragraph, the benefit from the obligation to pay liabilities incurred would benefit third parties, but of a large number of unidentified classes. The words “liabilities properly incurred” were not limited to liabilities to customers.         Michael Hartman (instructed under the pubilc access rules 2004) appeared for the appellants; Simon Mills (instructed by Goodman Derrick) appeared for the respondents. Eileen O’Grady, barrister