Third Party Beneficiaries

Question 1

3rd Party Beneficiaries - Gral Rule

Answer 1

Privity of contract necessary for P to have standing to sue + enforce contract rights UNLESS rights are bestowed on him by parties to contract

Question 2

3rd Party Beneficiaries - Bestowment of rights - Intention

Answer 2

• Parties must intent and declare for 3rd party to receive unqualified rights or benefits from future performance and enforceability of such rights

Question 3

3rd Party Beneficiaries - Bestowment of rights - Timing

Answer 3

• At time of primary contract creation
• “contemplated” - post creation usually ID as “assignment”

Question 4

3rd Party Beneficiaries - Legal Rights

Answer 4

• Receive payment otherwise intended for contract party
• Right to sue promisor directly

Question 5

3rd Party Beneficiaries - Promisor defenses

Answer 5

Any defense might have had against promisee

Question 6

3rd Party Beneficiaries - Vesting of Rights

Answer 6

• Beneficiary assents OR knows of assignment OR moves to indicate affirmative reliance OR commence action to enforce right
• Prior to vesting parties can modify contract to modify/rescind benefit

Question 7

3rd Party Beneficiaries - Creditor Beneficiary

Answer 7

Contract specifies promisor satisfies prior-owed obligation to promisee 3rd party creditor

Question 8

3rd Party Beneficiaries - Donee Beneficiary

Answer 8

• 3rd party receives assignment gratuitously from promisee
• Can only action against promisor
• Can be revoked prior to performance

Question 9

3rd Party Beneficiaries - Incidental Beneficiary

Answer 9

Not intended by parties to benefit from contract - hence no enforceable rights - i.e. neighbor to property under development contract, property value increases