Contracts Rules 3
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Third-party bene where performance of a promise would satisfy a duty of promisee to a third party, and the promisee did not intend to make a gift to the third party.
Example: A agrees to paint B’s house in return for B’s promise to pay $500 to C, because A owes C $500. C is an intended beneficiary and can recover the $500 from B.
Can sue either promisor or promisee to enforce contract
- Third party bene where promisee entered the contract for the purpose of conferring a gift on a
- third party,
: A pays B to build a house for C. C is a donee beneficiary of the contract between A and B.
Can sue promisor only to enforce the contract
Third party bene where the promisee wishes to make a gift of the promised performance or to satisfy an obligation to pay money owed by the promisee to the beneficiary.
Example: If A agrees to paint B’s house in return for B’s promise to pay $500 to C, C is an intended beneficiary and can recover the $500 from B.
Third party bene who benefits from a contract even though there is no contractual intent to benefit that person.
Has no rights to enforce the contract.
Rights of intended third-party bene vest when:
- Bene detrimentally relies on the right
- Bene expressly assents to the contract at request of a party
- Bene files a lawsuit to enforce the contract
Effect of vesting of third party bene rights
Original parties to the contract are both bound to perform the contract.
Rescission or modification of contract require consent from third party.
Defenses against third-party benes.
Any defenses promisor has against promisee can be raised against third party bene
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