Law School Discussion

Third Party Beneficiaries

Third Party Beneficiaries
« on: May 03, 2005, 09:28:16 AM »
This is what I have in my notes and outline, but I think I am either missing something or wrong about an aspect:

Parties can name intended benficiaries in a contract. However, the rights don't kickin (vest)until the beneficiary has knowledge of and accepts the benefit conferred. Therefore, the parties may modify the contract by changing benficiaries up until the beneficaries notification.

Can someone give some help. This is the last topic I need to review before my final tommorrow.

Re: Third Party Beneficiaries
« Reply #1 on: May 03, 2005, 09:48:49 AM »
Basically, yes. The Restatement (2d, section 311) says that the power "modify the contract terminates when the beneficiary, before he receives notification of the discharge or modification, either: (1) materially changes his position in justifiable reliance on the promise, or (2) brings suit on the promise, or (3) manifests assent to it at the request of the promisor or promisee."

Passage taken from Emmanuels (page 427)

Re: Third Party Beneficiaries
« Reply #2 on: May 03, 2005, 10:23:46 AM »
Thanks. I feel alot better now.

Re: Third Party Beneficiaries
« Reply #3 on: May 03, 2005, 06:48:13 PM »
The Restatement 2d is the majority position.

But a few states still use the Restatement 1st position that a third party donee (but not a creditor) beneficiary vest immediately when the contract is executed. In those cases, the beneficiary doesn't have to be aware to have rights.  Example - see Tweeddale v. Tweeddale 116 Wis. 517.