Contracts > Contracts Keyed to Murphy > Third Party Interests
KMART Corporation v. Balfour Beatty, Inc
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Brief Fact Summary.
Balfour Beatty Inc. (Defendant), entered into a contract with Tutu Park Ltd. (TPL) to build a shopping center. KMART Corporation (Plaintiff), is a tenant of TPL. When the shopping center where Plaintiff had a store was damaged in a hurricane, Plaintiff sued Defendant for negligence.
Synopsis of Rule of Law.
An intended beneficiary is a party who the promisee and/or promisor intended to benefit by the contract.
Defendant entered into a contract with TPI to build a shopping center where Plaintiff would be a tenant. During the planning, Defendant’s construction schedules were required to comply with Plaintiff’s schedule and the drawings made in the design phase of performance were to be submitted Plaintiff. In September of 1995, the roof of the shopping center was damaged by the winds from Hurricane Marilyn. If Plaintiff is an intended beneficiary of the contract between TPI and Defendant, Plaintiff will have to adhere to the arbitration clause in the contract.
Is Plaintiff an intended beneficiary of the contract between Defendant and TPI?
There are two ways in which the courts determine whether a party is an intended beneficiary to a contact: (1) they attempt to determine if the performance of the contract runs to the part or, the modern approach; and (2) they determine whether the promisor understood that premises had intent to benefit the third party.
Due to the involvement Plaintiff had in the building of the shopping center, Plaintiff is an intended third party beneficiary under either approach.
An intended beneficiary is any person who the promise and the promisor intend to receive benefit from a contact.