Future purchasers and tenants
To help develop this article, click 'Edit this article' above.
The original developer and often the first purchaser or tenant of a property will have an opportunity to enter into direct contractual arrangements to protect themselves against latent defects. It is unlikely that subsequent purchasers or tenants will have such an opportunity, unless they fall within the scope of the Contracts (Rights of Third Parties) Act 1999, and they will be (adopting the terminology of the rule of privity of contract) strangers to the original contractual arrangements with no remedies in contract against the parties responsible for the design and construction of the building.
The courts have often said in such circumstances that the law of contract provides for a chain of indemnity connecting the ultimate user with the original producer: for example D is the ultimate user or consumer who purchased from C the retailer, C having purchased from B the wholesaler and B having purchased from A the manufacturer. D can sue C for breach of contract but not B or A. However, if C is sued by D, then C will have a right of indemnity against B who in turn has a right of indemnity against A, creating 'the chain of indemnity' that links the manufacturer to the ultimate user.
Unfortunately, the strength of a chain of indemnity is only as great as its weakest link. If C the retailer becomes insolvent a critical link in the chain between D and A will have been broken. Further, a purchaser of a freehold building is faced with the difficulty of the principle of ‘caveat emptor’ (buyer beware) and the tenant of a leasehold building with the difficulty of full repairing covenants in the lease.
The future purchaser or tenant must rely on derivative contractual rights. Such rights arise by assignment, which is a unilateral act, or by novation that is synallagmatic (each party is bound to provide something to the other party – see Essentials of a contract).
[edit] Find out more
[edit] Related articles on Designing Buildings Wiki
Featured articles and news
Edmundson Apprentice of the Year award 2026
Entries now open for this Electrical Contractors' Association award.
Traditional blue-grey slate from one of the oldest and largest UK slate quarries down in Cornwall.
There are plenty of sources with the potential to be redeveloped.
Change of use legislation breaths new life into buildings
A run down on Class MA of the General Permitted Development Order.
Solar generation in the historic environment
Success requires understanding each site in detail.
Level 6 Design, Construction and Management BSc
CIOB launches first-ever degree programme to develop the next generation of construction leaders.
Open for business as of April, with its 2026 prospectus and new pipeline of housing schemes.
The operational value of workforce health
Keeping projects moving. Incorporating unplanned absence and the importance of health, in operations.
A carbon case for indigenous slate
UK slate can offer clear embodied carbon advantages.
Costs and insolvencies mount for SMEs, despite growth
Construction sector under insolvency and wage bill pressure in part linked to National Insurance, says report.
The place for vitrified clay pipes in modern infrastructure
Why vitrified clay pipes are reclaiming their role in built projects.
Research by construction PR consultancy LMC published.
Roles and responsibilities of domestic clients
ACA Safety in Construction guide for domestic clients.
Fire door compliance in UK commercial buildings
Architect and manufacturer gives their low down.