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A-One Landscapers, Inc., owes Finance Company $5,000. A-One enters into a contract with Office Park under which A-One promises to maintain the landscaping on Office Park's property. Under the contract, Office Park promises to pay Finance the amount that will be due A-One until A-One's debt to Finance is paid. A-One performs as promised, but Office Park does not pay Finance. Can Finance succeed in a suit against Office Park? Why or why not?
On Jun 01, 2024
Finance could succeed in a suit against Office Park. When a party promises to perform under a contract with the express intent that the other party's payment benefit a third party, the third party is an intended beneficiary. Assuming a contract is otherwise enforceable, an intended beneficiary can successfully sue to enforce the contract under which he or she will benefit.
The contract between A-One and Office Park expressly states that Office Park's payment for A-One's performance is to go directly to Finance. Thus, it is a third party beneficiary contract. Finance, the third party beneficiary, is, under the terms of the contract, an intended beneficiary. As such, Finance can successfully sue Office Park to enforce its promise to pay A-One's debt.