English High Court clarifies third-party enforcement rights under the UK Contract (Rights of Third Parties) Act 1999

29 July 2025

HNW Lending Limited v Lawrence [2025] EWHC 908 (Ch)

The English High Court (“High Court”) in HNW Lending Limited v Lawrence sought to clarify the scope of third-party enforcement rights under the UK Contract (Rights of Third Parties) Act 1999 (“CRTPA”), particularly in the context of peer-to-peer (“P2P”) lending structures. The High Court addressed whether a third party (which was referred to as a “security agent” acting on behalf of an unnamed lender) had standing to enforce a loan agreement against a borrower even though the third party was not named as a party to the loan agreement.

This issue is relevant to a broad range of English law governed financing arrangements, including modern financial arrangements where intermediaries (such as platform operators or agents) facilitate transactions but are not formal parties to the underlying contracts.

The case is notable not only for its interpretation of section 1(1)(a) of the CRTPA, but also for its departure from a previous decision of the Central London County Court in HNW v Mark (Central London County Court, HHJ Dight CBE, 7 August 2024, unreported) which had rejected similar enforcement rights. The High Court has granted permission to appeal to the English Court of Appeal underscoring the importance of legal certainty surrounding third-party enforcement rights in complex finance and lending structures, and signals the potential for further appellate clarification.

This article examines the High Court’s decision on the issue of standing and its intersection with the structure of P2P lending contracts and the CRTPA.

The CRTPA

On 11 May 2000, the CRTPA came into force allowing contracting parties from that date to expressly agree to grant enforcement rights in favour of third parties in certain circumstances. Any such third parties must be expressly identified in the contract by name, as a member of a class, or as answering a particular description - but need not be in existence when the contract is entered into. At the time, this was a significant development in English contract law which had long upheld the principles of privity of contract. Following the introduction of the CRTPA, contracting parties and their advisers have sought to clarify any intended third party enforcement rights by including express provisions in agreements or deeds that are governed by English law.

Factual background

HNW Lending Limited (“HNW”) is a UK Financial Conduct Authority-authorised P2P lender that arranges loans from lenders to businesses. In 2018, HNW arranged a nine-month term loan of approximately £1.5 million to an individual borrower (“Borrower”) to refinance existing loans taken to redevelop a property (“Property”), with first and second charges taken over 10 properties (including the Property) owned by the Borrower. HNW also subsequently arranged further advances to the Borrower.

The only named parties to the loan agreement arranged by HNW were: (i) the lender, identified only as numeral “1”; and (ii) the Borrower. The loan agreement included an express term that, although HNW was not a named party to the loan agreement, HNW could take the benefit of and specifically enforce each express term of the loan and any term implied under it pursuant to the CRTPA.

The Borrower did not make all of the interest payments under the loan agreement.  After the Borrower failed to repay the loan balance when the term expired, HNW brought a claim directly against the Borrower for possession of the Property and repayment of the outstanding amounts.

The Borrower’s defence included a number of different arguments including: (i) denying having agreed to the terms of the loan agreement and contending that the loan agreement and further advances were agreed under duress and/or undue influence; and (ii) contending that HNW did not have standing to sue. The Borrower also counterclaimed for an unspecified amount for damages in respect of loss and damage resulting from alleged unlawful conduct by HNW.

Among other applications, HNW applied to strike out the Borrower’s defence and counterclaim, and the Borrower applied to strike out HNW’s claim. The High Court granted HNW’s application for summary judgment on the Borrower’s defence and counterclaim, and refused the Borrower’s application to strike out HNW’s claim.

The issue of HNW’s standing 

The primary basis of the Borrower’s application to strike out the claim was that HNW had no standing to bring the claim, as HNW had no enforceable rights against the Borrower under the charge and the loan agreement.

The High Court considered the Central London County Court decision in HNW v Mark, which involved similar facts but reached a different conclusion. In those proceedings, HNW sought possession of a residential property in reliance on a loan agreement and first charge, the terms of which were materially similar as the terms of the loan agreement and charge in HNW Lending Limited v Lawrence. In particular, the following clause (“Clause 26.7”) was contained in the loan agreement in both cases:

“The borrower and lender agree that while HNW Lending Limited is not a party to this loan agreement, HNW Lending Limited may take the benefit of and specifically enforce each expressed term of this loan agreement and any term implied in it, pursuant to the Contracts (Rights of Third Parties) Act 1999.”

The Central London County Court determined that HNW had no cause of action in that case under the loan agreement and held, inter alia:

• HNW was not a party to the loan agreement and had purportedly limited rights against the borrower;
• HNW had no cause of action against the borrower, as the cause of action in that case was the lender’s but, had there been an assignment of the cause of action by the lender to HNW, HNW could have brought the claim against the borrower in its own name;
• HNW could not rely on the CRTPA as the borrower did not owe any obligations to HNW, nor was HNW expressed to benefit from the loan agreement; and
• the CRTPA was intended for contracting parties to agree to allow a third party to enforce a claim to a benefit conferred to the third party, which was not the case in HNW v Mark.

The High Court in HNW Lending Limited v Lawrence observed that its decision was contrary to an example in Chitty on Contracts (35th Edition) regarding the CRTPA:

“One contracting party (A) promises to the other (B) to pay £1,000 to a third party (C) and the contract goes on to provide that C is to be entitled to enforce the term containing this promise.” 

Section 1(1) of the CRTPA provides:

“(1) Subject to the provisions of this Act, a person who is not a party to a contract (a “third party”) may in his own right enforce a term of the contract
if –

(a) the contract expressly provides that he may, or

(b) subject to subsection (2), the term purports to confer a benefit on him.”

The High Court took the view in HNW Lending Limited v Lawrence that Clause 26.7 appeared to have been drafted with the CRTPA in mind, with the intention of conferring on HNW equivalent rights to those of the lender, thereby enabling HNW to enforce obligations owed to and benefitting the lender. The High Court concluded that section 1(1)(a) of the CRTPA is not limited to the enforcement by a third party of a term purporting to benefit the third party, since this type of term is specifically addressed in section 1(1)(b) of the CRTPA; it is sufficient for the contract to expressly provide that the third party may enforce the term. Alternatively, Clause 26.7 was effective under section 1(1)(b) of the CRTPA to confer on HNW the benefit of the covenants and rights of enforcement owed to the lender.

Conclusion 

The High Court’s ruling appears to be in line with the express language of the CRTPA and affirms the principle of contractual autonomy.

Although this area of law remains unsettled given conflicting decisions of the lower courts as well as a lack of case law on this issue in England following the introduction of the CRTPA, this judgment provides a degree of certainty for P2P lending platforms and other financial intermediaries which have similar clauses in their platform documents; it confirms the viability of third-party enforcement of loan terms provided that clear and express contractual provisions are included to that effect. The High Court’s ruling therefore underscores the importance of including clear contractual provisions that expressly set out any rights intended to be conferred upon third parties under any agreement or deed that is governed by English law.

Relevance to Singapore

This case may also serve as useful reference for entities in Singapore, as section 2(1) of the Singapore Contract (Right of Third Parties) Act 2001 (“SG CRTPA”) largely mirrors the section 1(1) of the CRPTA. While there is likewise a lack of case law in Singapore on this specific issue, the explanatory statement to the Singapore Contracts (Rights of Third Parties) Bill states that section 2(1) of the SG CRTPA is intended to be a two-limbed test for the circumstances in which a third party may enforce a term of the contract. Similar to the CRTPA, neither the explanatory note nor the SG CRTPA includes an additional requirement with respect to section 2(1)(a) that the third party is a beneficiary under the contract. If this issue comes before the Singapore courts, it is likely that a similar outcome to the judgment of the High Court in HNW Lending Limited v Lawrence will be reached, based on the plain wording of the SG CRTPA. While the High Court judgment in HNW Lending Limited v Lawrence Court would not be binding on the Singapore courts, it may be persuasive given the similarities in the CTRPA and the SG CRTPA.