BLAW-140-40A Week 6 Discussion Chapter 14 - Group A 2 - Why...

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Why the public is not usually considered an intended beneficiary of contracts made by the government? As the text states, The general rule is that members of the public are only incidental beneficiaries of contracts made by the government with a contractor to do public works. It is not illogical to see a contract between the government and a company pledged to perform a service on behalf of the public as one creating rights in particular members of the public, but the consequences of such a view could be extremely costly because everyone has some interest in public works and government services. A promisor under contract to the government is not liable for the consequential damages to a member of the public arising from its failure to perform (or from a faulty performance) unless the agreement specifically calls for such liability or unless the promisee (the government) would itself be liable and a suit directly against the promisor would be consistent with the contract terms and public policy. A promisor under contract to the government is not liable for the consequential damages to a member of the public arising from its failure to perform (or from a faulty performance) unless the agreement specifically calls for such liability or unless the promisee (the government) would itself be liable and a suit directly against the promisor would be consistent with the contract terms and public policy. However, in Gorrell v. Greensboro Water-Supply Co., The North Carolina Supreme Court subsequently made clear that it would use the analytic approach of the Restatement (Second) in determining whether a person could enforce or challenge a contract to which that person was not a party. The federal courts as well as most state courts follow the Restatement (Second) of Contracts to determine third-party beneficiary status, yet approaches taken by different state courts vary. North Carolina and a small number of other states have permitted the owner of a damaged or destroyed property to bring a third-party beneficiary claim against a provider who has a contract with the city.

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