The first event is that the construction is completed on time, but is defective.

Can Gorgon or Heracles then recover damages from Iffy for the breach of
contract but Heracles does not have a right to sue under common law (Tweedle v
Atkinson). Gorgon can alternatively sue on behalf of Heracles but Gorgon must
prove that it has a performance interest in the contract. Following the case of
Panatown v Alfred McAlpine Construction the main contractor was able to sue
under a deed of covenant entered into for this purpose, and so the main
contractor was only entitled to nominal damages. Arguing on the principlein
Linden Gardens Trust v Lanesta Sludge where Heracles may claim for the delay
in compensation.
However, it may be argued that the requirement of the contract has been
fulfilled and nothing has been mentioned whether Heracles can claim for the
poor construction and massive repair work. In this circumstances since Heracles
would not be entitled to claim, Gorgon will be able to claim on behalf of Heracles
following the case of Panatown v Alfed McAlpine Construction for the damages
suffered as a result of poor construction and money which is needed to be spent
for the massive construction.
Heracles will be advised that although prima facie, following the rule in Tweedle v
Atkinson, a third party in common law does not have a right to sue. Heracles can
still rely on the common law exceptions or under the contract of third parties
rights. Prima facie, Heracles cannot enforce the contract as there is no
consideration provided by Heracles. However, the doctrine of privity gives rise to
great injustice and inconvenience if applied too rigidly. Therefore Heracles would
be advised to rely on the common law exceptions available.
Trust agreement cannot work on the facts because the case Re Shebsman
indicates that there must be a real intention to create a trust and an artificial
intention would not be sufficient. Following this case, Heracles cannot infer a
trust because there is no clear intention that the parties wanted the dealings to
result in trust.
Heracles might want to try the possibility of bringing an action against Iffy
relying on the position in Beswick v Beswick for an indirect approach to acquire
specific performance. However, Heracles will be advised that it is only possible if
he is able to acquire Gorgons cooperation to sue on his behalf. Since Gorgon did
not suffer any loss, he might not want to take the hassle as there is no strong
benefit to him.
Gorgon can also sue to recover damages for the loss that Heracles suffered but
the alternative in Jackson v Horizon Holidays will not apply on the facts as on the
facts it is not a peace and enjoyment contract (Woodar v Whimpey) and that it
cannot be extended to such contract. Therefore the common law position and
exception would not apply and that Heracles cannot bring an action against Iffy.
Since the contract does not fall under one of the unique position which would
have allowed Heracles to sue, the Contract (Rights of Third Parties) act 1999 can
secure the right to bring an action if the requirement is satisfied. Applying the

1999 act, Heracles fall under s1(1)(b) where the contracts between G and I
confers a benefit to H. This is subject to s1(2) according to the case of Nisshin
Shipping v Cleaves if the contract is silent the parties is not precluded to sue. On
the facts, we are told that the contract between Gorgon and Iffy, Heracles will be
compensated for delays per month, satisfying s1(1)(b). However, it must be
noted that the claim within the contract between G and I was for the delay, not
conferring any other benefit upon Heracles. Thus Heracles claim under statute
will still fail for other claims. Gorgon is therefore advised that since he is privy to
contract and he has interest in the construction of the factory he therefore shall
sue Iffy directly for the damages.
With regards to damages, Gorgon has suffered losses resulting from the
defective construction of the factory. Since Gorgon is a party to the contract, he
can claim damages as per the case of Hadley v Baxendale where the normal loss
must have been in the contemplation of the parties. Heracles will face the same
claim as per the first issue.
In the third set of events, the sale of Gorgon to the competitor result from the
contract between Gorgon and Iffy to absolve any liability under the building
would see Gorgon forgoing the right to sue. Can Heracles then maintain an
action under the 1999 act. If there is a delay, since there is nothing to suggest
that Heracles cannot sue Iffy by virtue of S1(2), applied in Nisshin Shipping v
Cleaves, the party is not precluded to sue. If Heracles is able to rely on the act,
then the ability of the subsequent party to vary the contract is determined by the
terms of the original contract between Iffy and Gorgon.
If the contract Act 1999 does not apply, and both Gorgon and Iffy agreed to the
original contract then they can modify the contract to remove the subsequent
claims of Heracles. However the contract is silent on this point, and s2 of the
1999 Act will apply. S 2 (1)(a) will not apply as Heracles has not asserted to the
terms but subsection c can apply because Iffy has already started the
construction work and Heracles can argue that the promisor Gorgon is aware
that Heracles has relied on the terms and it would be reasonably seen that
Heracles would rely on it. Therefore to vary the contract, Heracles consent is
needed. Although the variation is not valid, Iffy might want to rely on S 3(2) to
argue that since he has paid to Gorgon for the exclusion of the liabilities, by way
of defence Iffy can argue that he is not entitled to follow his contractual
obligations.