NEC ECC: Can you give me an example of when Y(UK)3 would be used as to who might be named, and what benefit or right they then have?

i.e. why would you want/need to include Y(UK)3?

The Contracts (Rights of Third Parties) Act 1999, to which Y(UK) 3 refers, is a contract mechanism which allows a third party to be expressly identified in the contract, which then allows the third party a contractual remedy rather than having to pursue a claim in tort which is unlikely to succeed. This complies with section 1 (a) and 3 of the Act.

An example might be a Funder or Lender of project finance, an assignee of the Parties or possible end user.

Presumably you would not only name the third party but set out which clauses apply, including the rights in relation to these clauses. This essentially may be used instead of some form of warranty which creates a ‘duty of care’ in assuring quality or performance to a named beneficiary.

The use of Third Party Rights as opposed to a Warranty is often influenced by the usual practice of the parties involved in a project, although Y(UK)3 does allow a much simplified way to include such rights without having to resort to bespoke warranty agreements which are then reviewed by 2 sets of legal advisers, invoke various corporate governance procedures and further require numerous signatures, often ‘under seal’ as a Deed.