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Third Party Beneficiary Contract in Florida

| May 31, 2023 | Contracts

A third-party beneficiary contract is a type of contract that benefits a person who is not a party to the contract. In Florida, a third party can only be considered an intended beneficiary of a contract if the parties or the contract itself clearly indicate that the third party is meant to directly benefit from it.

How to Determine Intent

To determine whether a third party was intended to benefit from a contract, the parties’ intention is evaluated based on the entire contract, in addition to the circumstances surrounding the contract’s creation and the parties’ apparent purpose. The third party does not need to be explicitly mentioned in the contract, and the parties’ actions before and after the contract can provide evidence of intent. No consideration or privity is required between the third person and the contracting parties.

Examples of Third-Party Beneficiaries

Some examples of third-party beneficiaries include:

  • A creditor who is named in a contract between a debtor and a third party.
  • A beneficiary of a life insurance policy.
  • A person who is promised a gift by a contract between two other parties.

If you are a third-party beneficiary and you believe that your rights have been violated, you should speak with an experienced contract attorney. An attorney can help you understand your rights and options and can represent you in court if necessary.

Example: According to a case in Florida, a passenger on a cruise ship could be considered a third-party beneficiary of a contract between the cruise ship owner and a foreign excursion operator if the passenger can demonstrate the existence of a contract between the owner and operator to provide an excursion for passengers on the ship, an intention that the contract primarily and directly benefit her as a passenger of the owner, a breach of the contract by both the owner and operator, and resulting damages sustained by the passenger. See Brown v. Carnival Corporation, 215 F. Supp. 3d 1312 (S.D. Fla. 2016).

What About Defenses

Third-party beneficiary’s rights are affected by any issues with the original contract.

The Right to Sue

A third-party beneficiary can sue the promisor (the person who made the promise) if the promisor breaches the contract. However, the third-party beneficiary’s right to sue is limited by the rights of the promisee (the person who received the promise). This means that the third-party beneficiary cannot sue for more than the promisee could have sued for.

The Right to Defenses

The third-party beneficiary is also subject to the same defenses that the promisee could have raised against the promisor. This means that if the promisor could have raised a defense such as fraud or illegality, the third-party beneficiary can also raise that defense.

Modification and Rescission

The nominal parties to the contract (the promisee and the promisor) can modify or rescind the contract without the consent of the third-party beneficiary. However, if the third-party beneficiary has already accepted the benefits of the contract or has relied on the contract, the nominal parties cannot modify or rescind the contract without the third-party beneficiary’s consent.

If you are a third-party beneficiary, it is important to speak with an experienced contract attorney to understand your rights and options. An attorney can help you navigate the complex legal issues involved in third-party beneficiary law.