Section 1(1)(a) of C(RTP)A Allows a Third Party to Enforce

question 7

Multiple Choice

Section 1(1) (a) of C(RTP) A allows a third party to enforce a contractual term where the contract 'expressly provides that he may'. Section 1(1) (b) allows a third party to enforce a contractual term where the contract 'purports to confer a benefit on him', unless, according to section 1(2) , 'the parties did not intend the term to be enforceable by the third party'. Which of the following statements is false?

• A) Section 1(1)(b) only applies if a term can be implied to the effect that the parties intend to confer a legally enforceable right on the third party. The test of implied terms must be satisfied.
• B) Section 1(1)(b) applies whenever the contract purports to confer a benefit on the third party.
• C) Where the contract is silent on third-party action, section 1(2) will not dislodge section 1(1)(b).
• D) The third party must be expressly identified although he need not be in existence at the time of the contract.

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Definitions:

Residual Dividend Approach

A policy for determining dividend payments whereby dividends are set as the earnings left over after funding the company's capital expenditure and working capital needs.

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The spread between the high and low prices at which a security trades over a certain period of time.

Stock Split

A corporate action where a company divides its existing shares into multiple shares to increase the number of shares outstanding.

Cash Dividend

A payment made out of a company's profits to its shareholders, as determined by the company's board of directors, usually provided in cash.