Next Generation Bar Exam Quiz
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CONTRACTS
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Delgado owed First National Bank $300,000. Delgado hired Mason Works to remodel the office building Delgado owned. The contract stated: "Mason Works shall complete the remodel by July 1 so that Delgado can generate rental income and repay First National Bank." Mason Works finished three months late. Delgado lost rental income and defaulted on the loan. First National sued Mason Works, asserting that it was a third-party beneficiary of the remodeling contract.
Section 2 of the Model Third-Party Beneficiary Act provides: "A person is an intended beneficiary of a contract if the parties manifest an intent that the performance of the promise will be rendered directly to that person or that the person will have a right to enforce the promise. A creditor beneficiary is a person to whom the promisee owes an obligation and to whom the promised performance is to be paid in satisfaction of that obligation. A donee beneficiary is a person to whom the promisee intends to make a gift of the promised performance. A person who receives only an incidental benefit from the contract is not an intended beneficiary."
Is First National Bank an intended beneficiary of the Mason Works–Delgado contract?
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