More recently, the list of exceptions to the rule appears to have been extended. In Linden Gardens Trust v Lenesta Sludge Disposals Ltd, a building contract entered into between parties who described themselves as employer and contractor required the contractor to develop a site of shops, offices and flats. Later, the site, but not the benefit of the contract, was transferred by the employer to a third party, who discovered that the work done by the contractor was defective and required a considerable amount of remedial work. Some of these defects also came into existence after transfer of the site. The employer sued the contractor, but the latter argued that, since only the third party had suffered loss, the employer was not entitled to substantial damages. Lord Griffiths considered that the employer had suffered loss since he was required to spend money in order to obtain the benefit he had expected to receive from the contractor. Although he added, as a rider, that

doi:10.4324/9781843141518-301

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More recently, the list of exceptions to the rule appears to have been extended. In Linden Gardens Trust v Lenesta Sludge Disposals Ltd, a building contract entered into between parties who described themselves as employer and contractor required the contractor to develop a site of shops, offices and flats. Later, the site, but not the benefit of the contract, was transferred by the employer to a third party, who discovered that the work done by the contractor was defective and required a considerable amount of remedial work. Some of these defects also came into existence after transfer of the site. The employer sued the contractor, but the latter argued that, since only the third party had suffered loss, the employer was not entitled to substantial damages. Lord Griffiths considered that the employer had suffered loss since he was required to spend money in order to obtain the benefit he had expected to receive from the contractor. Although he added, as a rider, that

ABSTRACT

More recently, the list of exceptions to the rule appears to have been extended. In Linden Gardens Trust v Lenesta Sludge Disposals Ltd,34 a building contract entered into between parties who described themselves as employer and contractor required the contractor to develop a site of shops, offices and flats. Later, the site, but not the benefit of the contract, was transferred by the employer to a third party, who discovered that the work done by the contractor was defective and required a considerable amount of remedial work. Some of these defects also came into existence after transfer of the site. The employer sued the contractor, but the latter argued that, since only the third party had suffered loss, the employer was not entitled to substantial damages. Lord Griffiths considered that the employer had suffered loss since he was required to spend money in order to obtain the benefit he had expected to receive from the contractor.35 Although he added, as a rider, that the court will want to be satisfied that the repairs in respect of which substantial damages are given have been or are likely to be carried out. The majority in Lenesta based their reasoning on a slightly narrower ground, namely that the loss was suffered by the third party rather than the employer. On this basis, it became necessary to ask whether property and risk had passed to the third party purchaser and it was essential that the third party had acquired no independent contractual rights of his own. In these circumstances, it is reasonable to assume that the parties to the initial contract of carriage have made that contract with the intention of benefiting all third parties who might be expected to acquire an interest in the goods. Similarly, in Lenesta, it is reasonable to assume that both the employer and the contractor had intended that the site be sold off to third parties when it was ready to be occupied.