Chapter five
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SCHOOL OF LAW A THESIS SUBMITTED IN THE, CHALLENGES OF CASE MANAGEMENT IN SOMALILAND HIGH COURT
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- Promises Stipulations Concerning Third Parties
- The option to substitute a third party Article 326
CHAPTER FIVETHIRD PARTIES IN RELATION TO CONTRACTS IntroductionOne must first of all recall here the principle of the relative effect of contracts which parties can decide upon through their contractual freedom, leads to the logical consequence that what they decide upon by contract should normally not affect third parties read Article 148 Civil Code. In the civil law legal system, the basic principle, which is known as contracts produce effects as between the contracting parties is referred to as "relative effect of contracts", while it is called "privity of contracts", in the common law legal system. Promises & Stipulations Concerning Third PartiesIntroduction It is legally possible that persons may conclude a contract by reserving a right to substitute a third party in their place or by promising that a third party will commit a certain act or omit from performing an act. It is also possible to make contractual stipulations for the benefit of third parties. In this unit, one considers the situation of third parties who are not yet part of the contract. The contracting parties may provide in their agreement that a future third party may become part of such a contract. Three situations are considered by the Civil Code: the third party may be substituted to a contracting party, The third party will become the debtor of the contract, and The third party will become the creditor of the contract. In this unit, we will discuss the ways of substituting a third party in place of the contracting party and promising for a third party. Also, a situation where a party to a contract makes a third party beneficiary from a contract will be covered. The option to substitute a third party Article 326The promissory under such contract concludes the contract in his own name but reserves the option of substituting another third party for himself. Note immediately that the identity of the third party to be substituted is not required at the time of the formation of the contract. In fact, such a third party may be perfectly unknown to the other party and we can also imagine that he is still unknown to the party stipulating such possibility. Another remark is that such an option is open both to the creditor and to the debtor. Each side can introduce a clause of this type and it is theoretically possible that the parities actually performing the contract are not the parties who concluded it. For example: A and B conclude a contract for the delivery of grain, but the contract includes a clause stating that each party may substitute another person for himself. A sees he does not have enough grain and substitutes himself C, who has a big stock. B negotiates the sale of his right to D. The contract will be performed validly between C and D, although both may have been completely ignorant of its existence at the time of conclusion. Download 53.56 Kb. Share with your friends:
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