Brief Fact Summary.
Birthe Lise Robson (Plaintiff) brought this action against her father-in-law, Raymond F. Robson, Sr. (Defendant, to obtain his performance under a contract between Defendant and Plaintiff’s deceased husband, Raymond Robson, Jr. (Jr.)
Synopsis of Rule of Law.
Where the contract rights of a donee beneficiary have not vested and there has been no detrimental reliance, the contracting parties are free to modify or revoke their agreement at any time prior to vesting.
The father and son owned a business together and had a written contract under which the Defendant was to pay the Plaintiff $500 per month for five years following her husband’s death. Plaintiff and her husband were separated, and Jr. filed for a divorce. Before Jr. died, he and Defendant crossed out the applicable section of the contract and initialed it in the presence of three witnesses.
The Plaintiff sought enforcement of the provisions of the original contract requiring Defendant to pay her $500/month until she remarried. The parties cross-motioned for summary judgment .
May contracting parties discharge, rescind or revoke the benefit promised to a third-party donee beneficiary where the beneficiary has not detrimentally relied upon receiving the benefit?
Yes, Plaintiff’s motion for summary judgment denied and Defendant’s motion for summary judgment granted.
· Defendant and Jr. had a right to alter, rescind or revoke the contract prior to the time that the contract rights vested in the Plaintiff, the donee beneficiary.
· There was no evidence that Plaintiff detrimentally relied upon the agreement.
If a contract is entered into for the direct benefit of a third person who is not a party to the agreement, the third person may sue for a breach of the contract.View Full Point of Law
· The court distinguished between third-party creditor beneficiaries, with a pre-existing right, and donee beneficiaries.
· The rights of third-party creditor beneficiaries vest when the contract is signed; the rights of donee beneficiaries do not vest until the happening of the event specified in the agreement.