Third Parties Flashcards
Lawrence v. Fox, NY, 1859, p.829
Other People’s Promises/Rethinking
Holly owed money to Lawrence. Holly loaned money to Fox in exchange for the promise that Fox would pay off Holly’s debt to Lawrence. Lawrence sues Fox for payment. Ct: “where one person makes a promise to another for the benefit of a third person, that third person may maintain an action upon it.”
Seaver v. Ransom, NY, 1918, p.835
Other People’s Promises/Rethinking
Wife made judge husband promise to convey house to niece upon his death; he did not. Ct: 3rd party might enforce promise even if there is no commercial reason to intervene – the promisor’s damage may just be psychic utility. Quintessential remedy = conveyance, but if not possible, nominal damages.
Pierce Assocs. v. Nemours Foundation, 3d Cir., 1988, p.841
Other People’s Promises/Rethinking
In interpreting contract beneficiaries, must look at both language and context (parol evidence). For construction contracts, owner and subs are ≠ contracting parties and are insulated against each other. Buffer zone
Anderson v. Fox Hill vzillage Homeowners Corp., MA, 1997, p.841
Other People’s Promises/Rethinking
P injured by slipping on ice in her employer’s parking lot. Employer had clause in lease agreement that said they would be responsible for clearing snow and ice. Ct: P ≠ an intended beneficiary.
H.R. Moch Co. v. Rensselaer Water Co., NY, 1928, p.843
Other People’s Promises/Rethinking
Rensselaer Water (D) agreed with a city to supply water, but failed to supply water to fight a fire that destroyed a building owned by Moch Co. (P). A person will have a cause of action for breach of contract with a city only if it appears that the parties to the contract assumed liability for a lost benefit to individual members of the public. The benefit to the public contemplated by the contract to supply water is an incidental benefit, not an immediate benefit. There is no evidence that there was any intention to assume liability to all members of the public who could conceivably be injured by the failure to supply water. There is also no tort liability. Negligence in the performance of a contract will not result in liability if the negligence results in the denial of a benefit and not an active harm.
Langel v. Betz, NY, 1928, p.854
Other People’s Promises/Rethinking
Assign rights over to the new party, they avoid the duties by default unless the K unequivocally says otherwise (why wouldn’t the assignor give all of it away? Can the K be split?). Default rule protects the assignee, who may not understand all the terms of the assignment
Herzog v. Irace, MN, 1991, p.858
Other People’s Promises/Rethinking
MD was assigned by Jones a right to settlement from a personal injury claim in consideration for shoulder surgery. Lawyers were notified of the assignment. Then later said he would pay directly. MD sued to recover under assignment. Assignment was valid, as it needs only the intent of assignor to transfer right to assignee. Once clearly stated, it cannot be revoked by assignor. D was legally obligated to pay P.
Macke Co. v. Pizza of Gaithersburg, Inc. MD, 1970, p.862
Other People’s Promises/Rethinking
D had contract with Virginia Coffee Service to provide drink machines its restaurants. Virginia was bought by P and assigned its contract with D to P. D tried to terminate K, P sued for repudiation. Personal service contracts can≠ be assigned. This was ≠ a personal service contract, so assignment is allowed. There was no material change in K, so assignment is valid.
Crane Ice Cream Co. v. Terminal Freezing & Heating Co., MD, 1925, p.865
Other People’s Promises/Rethinking
When K made with respect to party’s character and trust, then it serves as a personal service K and so can≠ be assigned. (Extension of credit, etc.)
Homer v. Shaw, MA, 1912, p.872
Other People’s Promises/Rethinking
Lancaster had a subcontract to do construction work for D. Lancaster unable to continue under K, so borrowed money from P and assigned him compensation under the subK. Lancaster still unable to continue work, so Lancaster and D rescinded K and made new one. D and Lancaster can≠ modify assigned K without P’s consent. They can rescind if it becomes impossible (excuse) b/c of unforeseen circumstances. P has ≠ right of assignment to new K.
Lumley v. Gye, UK, 1853, p.874
Other People’s Promises/Rethinking
Gye (D) induced a theatrical performer to not honor her contract to perform in Lumley’s (P) theater. A party who wrongfully and maliciously induces an employee to breach a contract of employment is liable to the employee’s former employer. Malice will be found if the party inducing the breach knew about the contract, or intended to do some harm to the nonbreaching party. It does not matter that Wagner had not started her performances. There is no distinction in the wrong done in inducing a breach by an employee who has started performing the work agreed to, and the wrong of inducing an employee not to start work in the first place.
J.D. Edwards & Co. v. Podany, 7th Cir., 1999, p.881
Other People’s Promises/Rethinking
A consultant urged a software buyer to cancel its contract with J.D. Edwards (P) and buy alternate software from another source, and when J.D. Edwards (P) sued the consultant for interference with its contract, the defendant claimed the “consultant’s privilege.” Pursuant to the “consultant’s privilege,” an advisor may offer good-faith advice to a client without fear of liability should the client act on that advice to the harm of a third person.
Watson v. Cal-Three, LLC, CO, 2011, p.116
Other People’s Promises/Rethinking
The guarantor of financing on a real estate development project wrongfully notified the owner/developer that it was in default, and then foreclosed on and sold the property; the owner/developer countersued in a receivership action that remained pending between the parties and was awarded damages based on the profits the guarantor received. When the breaching party’s wrongdoing is intentional or substantial, recovery of the breaching party’s profits may be granted.
