Chapter 14. Contract Beneficiaries (302-315)

Question 1

A owes C a debt of $100. The debt is barred by the statute of limitations or by a discharge in bankruptcy, or is unenforceable because of the Statute of Frauds. B promises A to pay the barred or unenforceable debt. Who is the intended beneficiary?

Answer 1

C is an intended beneficiary under § 302(1)(a). Restatement 2d of Contracts § 302(b)

Question 2

B promises A to furnish support for A’s minor child C, whom A is bound by law to support. Who is the intended beneficiary?

Answer 2

C is an intended beneficiary under § 302(1)(a). Restatement 2d of Contracts § 302(b)

Question 3

B promises A to pay whatever debts A may incur in a certain undertaking. A incurs in the undertaking debts to C, D and E. Who is the intended beneficiary, depending on how the promise interpreted?

Answer 3

If the promise is interpreted as a promise that B will pay C, D and E, they are intended beneficiaries under § 302(1)(a). if the money is to be paid to A in order that he may be provided with money to pay C, D and E, they are at most incidental beneficiaries. Restatement 2d of Contracts § 302(b)

Question 4

A, an insurance company, promises B in a policy of insurance to pay $10,000 on B’s death to C, B’s wife. Who is the intended beneficiary?

Answer 4

C is an intended beneficiary under § 302(1)(b). Restatement 2d of Contracts § 302(c)

Question 5

C is a troublesome person who is annoying A. A dislikes him but, believing the best way to obtain freedom from annoyance is to make a present, secures from B a promise to give C a box of cigars. Who is the intended beneficiary?

Answer 5

C is an intended beneficiary under § 302(1)(b). Restatement 2d of Contracts § 302(c)

Question 6

A’s son C is indebted to D. With the purpose of assisting C, A secures from B a promise to pay the debt to D. Who is the intended beneficiary?

Answer 6

Both C and D are intended beneficiaries under § 302(1)(b). Restatement 2d of Contracts § 302(c)

Question 7

A owes C $100 for money lent. B promises A to pay C $200, both as a discharge of the debt and as an indication of A’s gratitude to C for making the loan. Who is the intended beneficiary in regards to what?

Answer 7

C is an intended beneficiary under § 302(1)(a) as to the amount of the debt and under § 302(1)(b) as to the excess. Restatement 2d of Contracts § 302(c)

Question 8

A conveys land to B in consideration of B’s promise to pay $15,000 as follows: $5,000 to C, A’s wife, on whom A wishes to make a settlement, $5,000 to D to whom A is indebted in that amount, and $5,000 to E, a life insurance company, to purchase an annuity payable to A during his life. Who is the intended beneficiary?

Answer 8

C is an intended beneficiary under § 302(1)(b). D is an intended beneficiary under § 302(1)(a). E is an incidental beneficiary. Restatement 2d of Contracts § 302(c)

Question 9

A owes C $100. Not knowing of any such debt, B promises A to pay $100 to C. Who is the intended beneficiary, depending on how the promise interpreted?

Answer 9

C is an intended beneficiary under § 302(1)(a) if A manifests an intention that the payment is to satisfy the debt, an intended beneficiary under § 302(1)(b) if A manifests an intention to make a gift of $100, leaving outstanding the original debt. Restatement 2d of Contracts § 302(c)

Question 10

A, the operator of a chicken processing and fertilizer plant, contracts with B, a municipality, to use B’s sewage system. With the purpose of preventing harm to landowners downstream from its system, B obtains from A a promise to remove specified types of waste from its deposits into the system. Who is the intended beneficiary?

Answer 10

C, a downstream landowner, is an intended beneficiary under § 302(1)(b). Restatement 2d of Contracts § 302(d)

Question 11

A, a corporation, contracts with B, an insurance company, that B shall pay to any future buyer of a car from A the loss he may suffer by the burning or theft of the car within one year after sale. Later A sells a car to C, telling C about the insurance. Who is the intended beneficiary?

Answer 11

C is an intended beneficiary. Restatement 2d of Contracts § 302(d)

Question 12

B contracts to build a house for A. Pursuant to the contract, B and his surety S execute a payment bond to A by which they promise A that all of B’s debts for labor and materials on the house will be paid. B later employs C as a carpenter and buys lumber from D. Who is the intended beneficiary?

Answer 12

C and D are intended beneficiaries of S’s promise to A, whether or not they have power to create liens on the house. Restatement 2d of Contracts § 302(d)

Question 13

C asserts that A owes him $100. A does not owe this money, or think that he owes it, but rather than engage in litigation and in order to obtain peace of mind A secures a promise from B to pay C $100. Who is the intended beneficiary?

Answer 13

C is an intended beneficiary. Restatement 2d of Contracts § 302(d)

Question 14

A, a labor union, enters into a collective bargaining agreement with B, an employer, in which B promises not to discriminate against any employee because of his membership in A. Who are the intended beneficiaries?

Answer 14

All B’s employees who are members of A are intended beneficiaries of the promise. Restatement 2d of Contracts § 302(d)

Question 15

A buys food from B, a grocer, for household use, relying on B’s express warranty. C, A’s minor child, is injured in person by breach of the warranty. To whom does the warrant extend?

Answer 15

Under Uniform Commercial Code § 2-318, without regard to the intention of A or B, the warranty extends to C. Restatement 2d of Contracts § 302(d)

Question 16

B contracts with A to erect an expensive building on A’s land. C’s adjoining land would be enhanced in value by the performance of the contract. Who is the beneficiary and in what way?

Answer 16

C is an incidental beneficiary. Restatement 2d of Contracts § 302(e)

Question 17

B contracts with A to buy a new car manufactured by C. ho is the beneficiary and in what way?

Answer 17

C is an incidental beneficiary, even though the promise can only be performed if money is paid to C. Restatement 2d of Contracts § 302(e)

Question 18

A, a labor union, promises B, a trade association, not to strike against any member of B during a certain period. One of the members of B charters a ship from C on terms under which such a strike would cause financial loss to C. Who is the beneficiary and in what way?

Answer 18

C is an incidental beneficiary of A’s promise. Restatement 2d of Contracts § 302(e)

Question 19

A contracts to erect a building for C. B then contracts with A to supply lumber needed for the building. Who is the beneficiary and in what way?

Answer 19

C is an incidental beneficiary of B’s promise, and B is an incidental beneficiary of C’s promise to pay A for the building. Restatement 2d of Contracts § 302(e)

Question 20

A, an insurance company, promises B in a policy of insurance to pay $10,000 on B’s death to C as trustee for B’s wife D. Who is the beneficiary and in what way? What may he enforce?

Answer 20

C is an intended beneficiary and may enforce his rights as trustee. D’s rights as beneficiary of the trust and the contract are enforceable only in the manner in which rights of other trust beneficiaries are enforced. Restatement 2d of Contracts § 303(a)

Question 21

A owes C $100. B promises A to pay the debt if Dancer wins the Derby. Who is the beneficiary and in what way?

Answer 21

C is an intended beneficiary of the conditional promise. Restatement 2d of Contracts § 303(a)

Question 22

C asserts and A denies that A owes C $100. B promises to pay the debt if it is legally recoverable. Who is the beneficiary and in what way?

Answer 22

C is an intended beneficiary of B’s conditional promise. Restatement 2d of Contracts § 303(a)

Question 23

A obtains from B, an insurance company, a policy on A’s life, payable to A’s wife, C. The policy is conditional on the payment of annual premiums. Who is the beneficiary and in what way?

Answer 23

C is an intended beneficiary, but her right is conditional. Restatement 2d of Contracts § 303(a)

Question 24

A’s son C has formed the X Automobile Company. For the stated purpose of benefiting C, A obtains B’s promise to buy twenty automobiles from the company. Who is the beneficiary and in what way?

Answer 24

The company is an intended beneficiary, though B’s duty to pay the price is conditional on delivery of the automobiles. Compare Illustration 17 to § 302. Restatement 2d of Contracts § 303(a)

Question 25

A owes C $100. For consideration B promises A to pay the debt. B breaks his contract. What recourse does C have?

Answer 25

C may sue B and obtain judgment for the amount of the debt. Restatement 2d of Contracts § 304(c)

Question 26

A transfers Blackacre to B subject to a mortgage in favor of C, which B assumes and agrees to pay. What recourse does C have?

Answer 26

After default C may sue B and get judgment for the amount of the mortgage debt, or, after foreclosure by sale, for the amount of any deficiency in the sum realized by the sale. Restatement 2d of Contracts § 304(c)

Question 27

A owes C $100. For consideration B promises A to pay $100 to C in satisfaction of the debt. Later the statute of limitations bars an action by C against A. Can this be used as a defense?

Answer 27

That fact is not of itself a defense in an action by C against B. Restatement 2d of Contracts § 304(c)

Question 28

A promises C to have a fence built between their lands, and C pays A the price. B contracts with A to assume A’s obligation to C, and A promises to pay B on completion of the work. If B fails, what recourse does C have? Does A have an obligation?

Answer 28

On B’s failure to build the fence, C may recover damages from B. But a contract by B to build the fence for A would ordinarily not be a contract to assume A’s obligation to C. Restatement 2d of Contracts § 304(c)

Question 29

A gives money to B, his son, who promises in consideration thereof to pay A’s daughter C, $5000 on A’s death. A dies and B fails to pay C. What recourse does C have?

Answer 29

C may sue on the promise and obtain judgment for $5000. Restatement 2d of Contracts § 304(d)

Question 30

A owes C $1000. For consideration B promises A to pay C $1000 for an assignment of C’s right. What recourse does C have?

Answer 30

On tender of such an assignment C can recover from B on his promise. Restatement 2d of Contracts § 304(e)

Question 31

A’s son C is indebted to D. With the purpose of assisting C, A secures from B for consideration a promise to pay the debt to D. What, if anything, may D enforce?

Answer 31

D may enforce B’s promise for D’s own benefit. Restatement 2d of Contracts § 304(e)

Question 32

A owns property subject to a mortgage in favor of C. C asserts and A denies that A is personally liable for the mortgage debt. To resolve the dispute, A transfers the property to B on B’s promise to pay the mortgage debt. What, if anything, may C enforce?

Answer 32

C may enforce B’s promise for C’s own benefit whether or not A is personally liable. Restatement 2d of Contracts § 304(e)

Question 33

A, a common carrier, is required as a condition of its license to maintain liability insurance covering claims for bodily injury arising out of A’s operations, and files a policy written by B. C claims to have been injured under circumstances covered by the policy. What recourse does C have?

Answer 33

C may maintain a direct action against B. Restatement 2d of Contracts § 304(e)

Question 34

A transfers property to B. A promises to use money received from B to discharge all A’s obligations “including C’s fees” up to $20,000. B promises to discharge all obligations in excess of $20,000 which A “is found to be responsible to pay including C’s fees.” What recourse does C have?

Answer 34

C cannot maintain an action against B on the promise before A’s liability has been established. Restatement 2d of Contracts § 304(e)

Question 35

In consideration of A’s promise to transfer to his brother C A’s interest in his mother’s estate, A’s father B promises A to pay a like amount to C. A makes the promised transfer, but B dies without performing his promise. What recourse does A have?

Answer 35

A may maintain a suit for specific performance against B’s personal representative. Restatement 2d of Contracts § 305(a)

Question 36

A owes C an unliquidated sum. In consideration of $100 paid to B by A, B promises A to pay C whatever is due. B breaks his promise, and A pays C a reasonable sum in discharge of C’s claim. What recourse does A have?

Answer 36

A can at his election recover from B either $100 or the amount paid C. Restatement 2d of Contracts § 305(a)

Question 37

A promises C to have a fence built between their lands, and C pays A the price of the fence. A informs B of the contract between A and C and of the danger that C’s cattle will harm A’s property if the fence is not properly built, and B contracts with A to carry out A’s contract with C to build the fence. Because of B’s breach of contract C’s cattle damage A’s property. What recourse does A have?

Answer 37

A may recover the damage from B. Restatement 2d of Contracts § 305(a)

Question 38

A owes C $100. For consideration B promises A to pay the debt to C. On B’s breach A may obtain a judgment for $100 against B. How might the court protect B?

Answer 38

But the court may protect B against double payment by permitting joinder of C, by an order that money collected by A is to be applied to reduce A’s debt to C, by giving B credit on the judgment for payments to C which reduce A’s obligation, or by enjoining enforcement of the judgment to the extent of such payment. Restatement 2d of Contracts § 305(b)

Question 39

A owes C $100. For consideration B promises A to pay the debt to C. A subsequently becomes bankrupt. What recourse does C have?

Answer 39

C may recover from B to the exclusion of A’s trustee in bankruptcy. Restatement 2d of Contracts § 305(b)

Question 40

A deposits money in B, a bank, to the joint credit of A and his wife C, payable to either A or C or the survivor. A and C make withdrawals. Is there a duty? What is B entitled to, if anything?

Answer 40

On A’s death B owes the balance to C, and is not entitled to credit for a payment to A’s personal representative. Restatement 2d of Contracts § 305(c)

Question 41

A, a stockholder of X, a corporation, guarantees payment of a debt owed by X to C. A sells his stock to B, who agrees to assume and pay A’s obligation on the guaranty. B fails to pay, and C sues A on the guaranty. What recourse does A have?

Answer 41

A may obtain a decree directing B to pay the debt to C. Restatement 2d of Contracts § 307(c)

Question 42

As part of a separation agreement B promises his wife A not to change the provision in B’s will for C, their son. A dies and B changes his will to C’s detriment, adding also a provision that C will forfeit any bequest if he questions the change before any tribunal. What recourse may A’s representative have?

Answer 42

A’s personal representative may sue for specific performance of B’s promise. Restatement 2d of Contracts § 307(d)

Question 43

A takes out a policy issued by B, an insurance company, the principal sum being payable to A at the age of 60, or if he dies before that age to his wife C, if she survives him. otherwise to such children as he may have surviving at the time of his death. C dies when A is 50. A dies at the age of 55. What, if anything, is D entitled to? What about the estates of A and C?

Answer 43

D, A’s only child then surviving, is entitled to the policy and its proceeds to the exclusion of the estates of A and C. Restatement 2d of Contracts § 308(a)

Question 44

B promises A to pay anyone to whom A may become indebted for the purchase of an automobile. A buys an automobile from C. Is there a duty?

Answer 44

B is under a duty to C. Restatement 2d of Contracts § 308(a)

Question 45

B promises A to pay C $100. B’s promise, owing to lack of consideration or illegality, gives A no right. What claim, if any, does C have?

Answer 45

Whether at the time of B’s promise C had a right against A to be paid $100 or not, C acquires no right against B. Restatement 2d of Contracts § 309(a)

Question 46

B orally contracts with A to convey Blackacre to C. The promise is unenforceable because not in writing. What recourse, if any, does C have?

Answer 46

Whether or not at the time of B’s promise C had a right against A to have Blackacre conveyed to him, C cannot maintain an action on B’s promise. Restatement 2d of Contracts § 309(a)

Question 47

The facts being otherwise as stated in Illustration 2, B subsequently delivers to A a written memorandum of the contract. What recourse, if any, does C have?

Answer 47

C can now maintain an action on B’s promise. Restatement 2d of Contracts § 309(a)

Question 48

B, a life insurance company, issues a policy to A insuring A’s life, the insurance money being payable to C. The policy reserves to A a power to change the beneficiary. What right, if any, does C have?

Answer 48

C’s right is subject to termination by A’s changing the beneficiary before the maturity of the policy. Restatement 2d of Contracts § 309(b)

Question 49

B promises A to pay C $100 in consideration of A’s promise to B to perform stated services for him. A substantially breaks his promise to perform these services. What right, if any, does C have?

Answer 49

Whether or not at the time of B’s promise C had a right against A to be paid $100 he has no right against B. Restatement 2d of Contracts § 309(b)

Question 50

A insures goods against fire with B, an insurance company. Later A mortgages the goods to C to secure a loan, and the insurance policy is amended to provide that loss is payable to A and C “as their interest may appear, subject to all the terms and conditions of the policy.” A deliberately sets fire to the goods. What recourse, if any, does C and/or A have against B?

Answer 50

Neither A nor C may recover from B for the resulting damage. Restatement 2d of Contracts § 309(b)

Question 51

The facts being otherwise as stated in Illustration 6, the policy provides that C’s interest shall not be invalidated by any act or neglect of the mortgagor. What recourse, if any, does C have?

Answer 51

C may recover the amount of the loss from B. Restatement 2d of Contracts § 309(b)

Question 52

B and his surety S contract with A, a city, to grade streets and to pay all laborers and materialmen on the job. The contract provides that any laborer working under the contract shall be entitled to sue and recover from S. A extends B’s time for performance without S’s consent. Can the extension of time be used as a defense?

Answer 52

In a suit by C, a laborer, against S, the extension of time is not a defense. Restatement 2d of Contracts § 309(b)

Question 53

In exchange for a conveyance of one parcel of land by B to A, A conveys another parcel of land to B subject to a mortgage in favor of C, which B assumes and agrees to pay, and A also agrees to pay money to B at a later date. C sues B. What recourse, if any, does B have?

Answer 53

In an action by C on B’s promise, B can offset any part of the sum payable by A which is due and unpaid. Restatement 2d of Contracts § 309(c)

Question 54

A collective bargaining agreement between A, a labor union, and many coal operators including B provides that each operator will pay 40 cents to C, trustee of a welfare fund for coal miners, for each ton of coal mined. In violation of the agreement A calls a strike of B’s employees. What is B entitled to, if anything?

Answer 54

B is not entitled to deduct the resulting damage from the payments due to C. Restatement 2d of Contracts § 309(c)

Question 55

A, a bank, goes out of business, transferring assets to B, another bank, in consideration of B’s promise to pay A’s deposit liabilities. The applicable statute of limitations does not bar deposit liabilities of a going bank until six years after demand. Can statute of limitations be used as a defense by B?

Answer 55

In an action by C, a depositor of A, it is no defense to B that C’s claim against A is barred by the statute of limitations. Restatement 2d of Contracts § 309(c)

Question 56

A owes C $100. For consideration B promises A to pay the debt. B breaks his contract. What recourse, if any, does C have?

Answer 56

C can sue A and can also sue B and get judgment against each of them for $100, and can enforce either judgment until he has collected $100. Entire or partial satisfaction of a judgment against either A or B precludes to that extent enforcement of a judgment against the other, subject to A’s right of subrogation. Restatement 2d of Contracts § 310(a)

Question 57

A transfers Blackacre to B subject to a mortgage in favor of C, which B assumes and contracts to pay. What recourse, if any, does C have?

Answer 57

C can sue A and he can also sue B and get judgment against each for the amount of the mortgage or, if the mortgaged property has been sold on foreclosure, for the amount of any deficiency in the sum realized by the sale. Restatement 2d of Contracts § 310(a)

Question 58

B contracts with A to pay A’s debt to C. D contracts with B to pay the debt. E contracts with D to pay it. What recourse, if any, does C have?

Answer 58

C can bring actions against A, B, D and E and obtain judgment against each of them. Restatement 2d of Contracts § 310(a)

Question 59

A owes C $1000. For consideration B promises A to pay the debt. B gives C a bond as security, but fails to pay the debt. C sues A and B and obtains a judgment against each of them, and obtains full payment by a levy of execution on A’s property. What does this mean for A?

Answer 59

A is subrogated to C’s judgment against B and to the security of the bond. Restatement 2d of Contracts § 310(c)

Question 60

A insures his life for $10,000 with the B Insurance Company, designating C as beneficiary but reserving power to change the beneficiary. The policy provides for surrender of the policy by the insured for a stated cash value. Subsequently A by appropriate indorsement on the policy irrevocably designates C as beneficiary. What does this mean for A?

Answer 60

A’s power to surrender for cash is terminated. Restatement 2d of Contracts § 311(c)

Question 61

A insures his life for $10,000 with the B Insurance Company, designating C as beneficiary but reserving power to change the beneficiary. The policy provides for assignment by the insured, and A assigns it to D as security for a loan. A dies. What right, if any, does C have?

Answer 61

On A’s death C’s right is limited to the excess over the amount due to D. Restatement 2d of Contracts § 311(c)

Question 62

A is employed by the B corporation, and designates his infant son C as beneficiary of a death benefit under a plan set up by B. No provision is made for a power to change the beneficiary. A later notifies B that the designation of C is revoked and that the benefit is to be paid to D, to whom A is newly married. How, if at all, does this affect C’s right?

Answer 62

C’s right is not affected. Restatement 2d of Contracts § 311(d)

Question 63

A and his wife and his infant son C move onto the farm of A’s uncle B under an agreement between A and B that they will care for B and the farm until B dies and that B will pay A good wages and will convey a specified portion of the farm to C when C becomes 21 years old. B is unable to pay wages and conveys a different portion of the farm to A in satisfaction of his obligations under the original agreement. How, if at all, does this affect C’s right?

Answer 63

C’s right is discharged. Restatement 2d of Contracts § 311(d)

Question 64

A contracts with B for liability insurance covering any person operating A’s automobile with A’s permission. C incurs liability covered by the policy. Thereafter A and B agree to rescind the policy. How, if at all, does this affect C’s right?

Answer 64

The attempted rescission does not affect the rights of C or the person to whom he is liable. Restatement 2d of Contracts § 311(e)

Question 65

A contracts with B to pay B $200 in return for B’s delivery of goods to C as a gift from A. Before any goods are identified to the contract or any payment is made and before C learns of the contract, A and B rescind it. What recourse does C have?

Answer 65

After learning of the rescission, C has no right against B. Restatement 2d of Contracts § 311(f)

Question 66

B contracts with A to pay C $200 which A owes C. Before C learns of this contract, in consideration of a horse worth $200, A releases B from his contract. What recourse does C have?

Answer 66

After learning of the release, C has no right against B. Restatement 2d of Contracts § 311(f)

Question 67

A conveys land to B and B assumes and agrees to pay to C a debt owed by A which is secured by a mortgage on the land. Before C learns of the contract, B resells the land to D, who assumes and agrees to pay the debt. As part of the transaction between B and D and in consideration thereof, A releases B from his promise to pay C. What recourse does C have?

Answer 67

After learning of the release, C has no right against B. Restatement 2d of Contracts § 311(f)

Question 68

A contracts with B to pay B $200 in return for B’s delivery of goods to C as a gift from A. Before any goods are identified to the contract or any payment is made and before C learns of the contract, A and B rescind it. C brings suit against B before receiving notification of the rescission or release. For whom should judgment be given?

Answer 68

Judgment should be given for C. Restatement 2d of Contracts § 311(h)

Question 69

B contracts with A to pay C $200 which A owes C. Before C learns of this contract, in consideration of a horse worth $200, A releases B from his contract. C brings suit against B before receiving notification of the rescission or release. For whom should judgment be given?

Answer 69

Judgment should be given for C. Restatement 2d of Contracts § 311(h)

Question 70

A conveys land to B and B assumes and agrees to pay to C a debt owed by A which is secured by a mortgage on the land. Before C learns of the contract, B resells the land to D, who assumes and agrees to pay the debt. As part of the transaction between B and D and in consideration thereof, A releases B from his promise to pay C. C brings suit against B before receiving notification of the rescission or release. For whom should judgment be given?

Answer 70

Judgment should be given for C. Restatement 2d of Contracts § 311(h)

Question 71

B contracts with A to pay C $200 which A owes C, and A notifies C of the contract by mail. C mails a letter to A assenting to the contract before receiving notification of a rescission by A and B. How, if at all, does this affect C?

Answer 71

The rescission is ineffective against C. Compare §§ 42, 63. Restatement 2d of Contracts § 311(h)

Question 72

A and B, two affiliated corporations, contract that upon surrender of outstanding bonds issued by A new bonds will be issued, bond for bond, paying less interest but guaranteed by B. Forty years later, shortly before the old bonds mature, only a small number of the old bonds have been surrendered, and A and B release each other from the contract with respect to any new bonds not yet issued. Are the releases effective?

Answer 72

The releases are effective against any holder of old bonds who receives notification of the releases before he surrenders his bonds. Restatement 2d of Contracts § 311(h)

Question 73

B contracts with A to pay C $200 which A owes C. Before C learns of this contract, A, in consideration of B’s proposing him for admission to a social club, releases B from his contract. A has no assets other than this contract worth $200. How, if at all, does this affect C?

Answer 73

The release does not impair C’s right against B. Restatement 2d of Contracts § 311(i)

Question 74

A, a stockholder in X, a corporation, guarantees the payment of a debt owed by X to C and agrees to pay interest and an attorney’s fee. Subsequently A sells his stock to B, who agrees to assume and pay the debt owed by X. What, if anything, is B liable for?

Answer 74

B is liable for interest and an attorney’s fee only to the extent of X’s liability. Restatement 2d of Contracts § 312(b)

Question 75

A, a stockholder in X, a corporation, guarantees the payment of a debt owed by X to C and agrees to pay interest and an attorney’s fee. Subsequently A sells his stock to B, who agrees to assume and pay the debt owed by X and to pay interest and an attorney’s fee. What, if anything, is B liable for?

Answer 75

B’s liability for interest and an attorney’s fee is not affected by the nonliability of X or A or both. Restatement 2d of Contracts § 312(b)

Question 76

A, the owner of Blackacre, mortgages it to C for $5000. A transfers Blackacre subject to the mortgage to X, who does not assume or agree to pay the mortgage debt. X transfers Blackacre to B, who with knowledge of all the facts assumes and agrees to pay the mortgage debt. What, if anything, is B liable for?

Answer 76

B is liable to C for the amount of the debt. Restatement 2d of Contracts § 312(b)

Question 77

A, the owner of Blackacre, mortgages it to C for $5000. A transfers Blackacre subject to the mortgage to X, who does not assume or agree to pay the mortgage debt. X transfers Blackacre to B, who assumes and agrees to pay the mortgage debt. However, B shows by clear and convincing evidence that his promise was inserted in the deed by mistake of the scrivener, contrary to the contract between X and B and without their knowledge. Can the deed be reformed?

Answer 77

In the absence of a change of circumstances making reformation inequitable, the deed will be reformed to strike out the promise. See § 155. Restatement 2d of Contracts § 312(b)

Question 78

B contracts with the United States to carry mail over a certain route. C, a member of the public, is injured by B’s failure to perform his contract. Does B have a duty?

Answer 78

B is under no contractual duty to C. Restatement 2d of Contracts § 313(a)

Question 79

B, a water company, contracts with A, a municipality, to maintain a certain pressure of water at the hydrants on the streets of the municipality. A owes no duty to the public to maintain that pressure. The house of C, an inhabitant of the municipality, is destroyed by fire, owing to B’s failure to maintain the agreed pressure. Does B have a duty?

Answer 79

B is under no contractual duty to C. Restatement 2d of Contracts § 313(a)

Question 80

A, a municipality, enters into a contract with B, by which B promises to build a subway and to pay damages directly to any person who may be injured by the work of construction. Because of the work done in the construction of the subway, C’s house is injured by the settling of the land on which it stands. D suffers personal injuries from the blasting of rock during the construction. Does B have a duty?

Answer 80

B is under a contractual duty to C and D. Restatement 2d of Contracts § 313(c)

Question 81

A, a county, enters into a contract with B, a surety company, by which B promises indemnity to a stated amount for any damages caused by clerical errors of clerks in the Registry of Deeds. C is injured by an error of such a clerk. What recourse does C have?

Answer 81

C can recover damages from B. Restatement 2d of Contracts § 313(c)

Question 82

A, a municipality, owes a duty to the public to keep its streets in repair. B, a street railway company, contracts to keep a portion of these streets in repair but fails to do so. C, a member of the public, is injured thereby. What recourse does C have?

Answer 82

C may bring actions against A and B and can recover judgment against each of them. Restatement 2d of Contracts § 313(c)

Question 83

A, a municipality, awards a construction contract to B. The contract provides that if through B’s act or neglect another contractor on the same project suffers loss and makes a claim against A, B will defend at B’s own expense any suit based on the claim and will pay any resulting judgment against A. C, another contractor on the same project, makes a claim against A based on breach by B of B’s contract with A. What recourse, if any, does C have?

Answer 83

The described provision does not enable C to bring a direct action as an intended beneficiary of B’s promise. Restatement 2d of Contracts § 313(c)

Question 84

A owes C a debt of $10,000, secured by a mortgage on A’s land. A sells Blackacre to B, who assumes and agrees to pay the mortgage debt. C, knowing of this assumption, releases a portion of the mortgaged premises from the lien of the mortgage. The remaining portion of Blackacre is then worth $12,000, but at the date of maturity of the mortgage is worth $8,000. The released land is then worth $2,000. B makes default in paying the debt. What recourse, if any, does C have?

Answer 84

C can recover from A only $8,000. Since C’s own act has diminished by $2,000 the value of the security applicable to the debt, his right against A is subject to diminution by that amount. If the released land is then worth $1,000, C can recover $9,000 from A. Restatement 2d of Contracts § 314(a)