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Brief Fact Summary. Party 1 contracted to perform work for party 2. Party 1 directed, and party 2 agreed to pay party 3 a certain amount of money after party 1 finished their work. Party 1 never completed the work.
Synopsis of Rule of Law. In order for a third party beneficiary to successfully sue on a contract, the action taken by another party generating which income entitles him to the compensation, must be performed.
On the other hand, if the promise means that the promisor agrees to pay a sum of money to A, to whom the promisee says he is indebted, it is immaterial whether the promisee is actually indebted to that amount or at all.View Full Point of Law
Issue. Is payment to the third party beneficiary, the Plaintiff, conditioned upon Mr. Lidke performing the work he was obligated to do for the Defendant?
Held. Yes. The court observed "[i]t would be a strange rule of law that would permit the plaintiff to recover in this case." A condition to the Plaintiff being paid was Mr. Lipke completing the required work. As such, a rule enforcing this agreement without the work being completed would be "against all sense of justice and fair dealing–contrary to common sense."
Dissent. The dissenting justice contended "[t]he contract, as soon as signed, created mutual obligations, one of which was to pay the plaintiff $671.80. That promise, according to the writing, was unconditional; it was not provided that it should be paid at some future time or dependent in any way upon Lidke's future conduct."
Discussion. Generally, a third party beneficiary has the power to enforce the contract it is a party to, but this case demonstrates that certain prerequisites sometimes must be fulfilled before this is the case.