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Brief Fact Summary.
Bain (plaintiff) sued Gillispie (defendant) seeking injunctive relief.
Synopsis of Rule of Law.
A third party beneficiary cannot bring suit which arises out of a contract between two other parties, unless those parties intended the third party to be a beneficiary to the contract.
Whether a duty arises out of the parties relationship is always a matter of law for the court.
View Full Point of Law
Plaintiff was a college basketball referee and the defendant was the owner a store that specialized in items related to the University of Iowa, but had no association with the university. After the plaintiff refereed a basketball game that Iowa lost, multiple fans blamed him for the loss, and as a result the defendant began producing shirts depicting the plaintiff being hung by a noose. The Plaintiff sued for injunctive relief to prevent the shirt from being produced. The defendant counterclaimed arguing that he was entitled to damages as a third-party beneficiary stemming from the contract between the plaintiff and the basketball conference the University of Iowa belonged to, the Big Ten.
Issue.
Whether a third-party beneficiary can bring suit which arises out of a contract between two other parties, unless those parties intended the third party to be a beneficiary to the contract.
Held.
No. A third party beneficiary cannot bring suit which arises out of a contract between two other parties, unless those parties intended the third party to be a beneficiary to the contract.
Discussion.
A third party can only benefit from a contract between two other parties of those parties intended the third party to directly benefit from the contract. This occurs when the contracting parties intend to either make a gift to the third party under the contract, or owe the third party a duty under the contract. Here, the evidence is lacking the contracting parties intended the defendant to benefit from their contract. The defendant may not assert any rights as a third-party beneficiary because the contract does not indicate that is what the parties intended.