CH 6 - Contracts CH 6 1 CH 6 Rights and Duties of...

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Contracts CH 6: 1 CH 6: Rights and Duties of Non-Parties I. Third Party Beneficiaries a. Basis, Creditor and Donee Beneficiaries i. Definitions 1. Third Party Beneficiaries (TPB)- third party whom parties to a K intended to benefit through the K 2. Basis - English CL Rule for enforcement of a K by lawsuit a. Requires privity between the parties b. American Exception: A K made to benefit a non-party may be enforced by the courts 3. Creditor Beneficiary- TPB who underlying right is a DEBT 4. Donee Beneficiary- TPB whose underlying right is a GIFT ii. Lawrence v Fox- 3 rd party loaned money to D to give P 1. D never gave P the money so P sued 2. Issue: K was btwn the 3rd party & P, not P & D; therefore, can P sue as a TPB? a. YES b. Where one person makes a promise to another for the benefit of a third person, that third person may maintain an action upon it iii. Seaver v Ransom- niece, uncle, and sick aunt 1. Double Recovery Problem 2. Where a legatee promises the testator that he’ll use the property given him by the will for a particular purpose, a trust arises 3. Equity compels the application of property thus obtained to the purpose of the testator, but equity cannot so impress a trust, except on property obtained by the promise 4. Privity between a P and D is necessary to the maintenance of an action on the K 5. Main reason TPB could sue was because promisee couldn’t bc no consideration b. Intent to Benefit i. General Rule: For TPB to recover, INTENT of parties to benefit the TPB must be clear 1. Intent can be express or implied 2. It’s not necessary that primary purpose of K be to benefit the TPB, but it must be a substantial purpose ii. R2K 302: Intended and Incidental Beneficiaries 1. Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either a. The performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary OR b. The circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance 2. An incidental beneficiary is a beneficiary who is not an intended beneficiary c. Determination of TPB i. Express Identification: 1. Parties may expressly identify the TPB in the K and thereby express their INTENT to benefit that person ii. Implied Identification: 1. Duty-Owed Test 2. Direct Benefit Test ( See HR Moch)
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Contracts CH 6: 2 iii. Anderson v Fox Hill Village Homeowners – nursing home ice slip case 1. Issue: constructive condition of TPB 2. P (employee of home) slipped on ice and tried to sell D who was in charge to remove snow and ice from all driveways and walkways a. R2K 302: In order for P to prevail under this theory, the P must show that the D and the lessor intended to give her the benefit of the promised performance 3. The condition was in no way expressed to benefit employees so P was no more
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This note was uploaded on 04/18/2008 for the course LAW Contracts taught by Professor G.flint during the Fall '07 term at Saint Mary's University Texas.

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CH 6 - Contracts CH 6 1 CH 6 Rights and Duties of...

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