Contemporary Business Law Study Set 1
Quiz 13 :
Third-Party Rights and Discharge
Intended beneficiary: An intended beneficiary refers to a person who is a third party to the contract and will benefit from the contract made between two other parties. The intended beneficiary is not a party to the original contract, but if the contract is fulfilled the third party is intended to realize a profit. The intended beneficiary has the legal rights to enforce a contract or share its proceeds if they can prove they are intended beneficiary and not incidental beneficiary. Case laws: The person P owner of the P baseball team decided to construct a baseball stadium. He entered into a contract with DH who would act as a construction manager. The manager entered into multiple contracts with sub contractors amongst which RCD was one such contractor. The construction resulted in various delays and disruptions; as a result RCD suffered numerous losses and claimed compensation. The person P argued that the party RCD was an incidental beneficiary and not an intended one. Conclusion: The joint venture party RCD was a third party to the contract, but is going to benefit from the contract between the person P and DH. Since the person is going to realize a profit even if he is not the original party, he shall be considered to be intended beneficiary. An incidental beneficiary is one who is not a direct party to the contract yet benefits from the performance of the obligations by the original parties. Thus, it can be contemplated that the person P's claim that RCD is an incidental beneficiary is not correct.
In the given case, the plaintiff appealed and the complaint was dismissed by the court. It was held that attorney who drafted the will allegedly, based on breach of contract or negligence was not responsible to beneficiaries because rules were violated by trust provisions to restraint on alienation and perpetuities.
The performance rights of a contract of personal service need specific skills and on the basis of relationships, the different parties will not be allocated work. The contracts can be assigned only when the obligation and the performance character does not alter following the assignment. Although the special skills of Mr C was required in the contract but he is not grateful to differently perform for company M than the actual owners. The contract even restricted the assignment to other owner of similar club. Hence, the contract is assignable under these facts.