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Third-Party Beneficiary Contracts

While it may seem counter-intuitive and illogical, it is possible for a third-party to a contract (i.e., a non-signer) to sue one of the parties to the contract for breach of contract. A third party beneficiary to a contract is one who is not privy to a contract or its consideration but who may still maintain a cause of action for breach of the contract. Andes v. Albano, 853 S.W.2d 936, 942 (Mo. 1993). To prevent seemingly unlimited liability to third-parties, only third-parties for whose primary benefit the parties contract may maintan the suit. Id.

In making the determination about whether someone counts as a third-party beneficiary, a court must look at whether the contracting parties intended a third-party beneficiary to be such by looking at the contract language and the circumstances surrounding its execution. Terre Du Lac Ass’n v. Terre Du Lac, Inc., 737 S.W.2d 206, 213 (Mo. Ct. App. 1987). Although it is not necessary that the third-party beneficiary must be expressly labeled, the terms of the contract must express directly and clearly an intent to benefit an identifiable person or class of persons. Id.

The law has created three (3) classes of beneficiaries in this analysis: donee, creditor and incidental. A donee and creditor beneficiary may sue for breach, but an incidental beneficiary may not. Kansas City N.O. Nelson Co. Mid-Western Construction Co. of Missouri, Inc., 782 S.W.2d 672, 677 (Mo. Ct. App. 1989).

Contact with questions about breach of contract litigation and third-party beneficiary contract actions.