Third Party Beneficiary of Contractual Rights

Sanofi Pasteur Limited v. UPS SCS, Inc., 2015 ONCA 88:

[55]       The Supreme Court has adopted a principled approach to when the doctrine of privity of contract – under which a contract cannot confer rights or impose obligations arising under it on anyone other than the parties to the contract – should be relaxed. In Fraser River, the Court articulated the following two-part test to be applied in determining if a third-party should be permitted to enforce the benefit of a contractual provision to defend against an action by one of the contracting parties:

1.        did the parties to the contract intend to extend the benefit in question to the third party seeking to rely on the contractual provision; and

2.        are the activities performed by the third party seeking to rely on the contractual provision the very activities contemplated as coming within the scope of the contract in general, or the provision in particular, again as determined by reference to the intentions of the parties? 

[56]       The intention to extend the benefit in question may be express or implied in all of the circumstances: see London Drugs Ltd. v. Kuehne & Nagel International Ltd., [1992] 3 S.C.R. 299, at p. 449.