ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Saturday, August 26, 2017

A quick reminder about third-party beneficiaries

There has to be some evidence that you were intended to be a third-party beneficiary in order to be able to enforce the contract. 

This reminder courtesy of a recent case out of the Southern District of New York, Fashion One Television LLC v. Fashion TV Programmgesellschaft MBH, 16-CV-5328 (JMF), where Fashion One Television tried to sue on a contract between the defendant and Fashion One LLC. Fashion One LLC was a "direct affiliate" of Fashion One Television, with the same owner and principal place of business. However, that doesn't change the fact that Fashion One Television was still a separate legally distinct entity who did not sign the contract, and nothing on the face of the contract indicated that Fashion One Television was an intended beneficiary of the contract entitled to enforce the contract. The contract had a merger clause and a clause that prohibited it from being assigned. So, Fashion One Television was not an intended third-party beneficiary, could not enforce the contract, and lacked standing, and its complaint was dismissed. 

http://lawprofessors.typepad.com/contractsprof_blog/2017/08/a-quick-reminder-about-third-party-beneficiaries.html

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