California Civil Jury Instructions (CACI)
301. Third-Party Beneficiary
[Name of plaintiff] is not a party to the contract. However, [name of plaintiff] may be entitled to damages for breach of contract if [he/she/it] proves that [insert names of the contracting parties] intended for [name of plaintiff] to benefit from their contract.
It is not necessary for [name of plaintiff] to have been named in the contract. In deciding what [insert names of the contracting parties] intended, you should consider the entire contract and the circumstances under which it was made.
New September 2003
Directions for Use
This topic may or may not be a question for the jury to decide. Third-party beneficiary status may be determined as a question of law if there is no conflicting extrinsic evidence. (Kalmanovitz v. Bitting (1996) 43 Cal.App.4th 311, 315 [50 Cal.Rptr.2d 332].)
These pattern jury instructions may need to be modified in cases brought by plaintiffs who are third-party beneficiaries.
Sources and Authority
- Civil Code section 1559 provides: “A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.”
- A third party may qualify as a beneficiary under a contract where the contracting parties must have intended to benefit that individual and such intent appears from the terms of the agreement. (Brinton v. Bankers Pension Services, Inc. (1999) 76 Cal.App.4th 550, 558 [90 Cal.Rptr.2d 469].) However, “[i]nsofar as intent to benefit a third person is important in determining his right to bring an action under a contract, it is sufficient that the promisor must have understood that the promisee had such intent. No specific manifestation by the promisor of an intent to benefit the third person is required.” (Lucas v. Hamm (1961) 56 Cal.2d 583, 591 [15 Cal.Rptr. 821, 364 P.2d 685].)
- “Traditional third party beneficiary principles do not require that the person to be benefited be named in the contract.” (Harper v. Wausau Insurance Corp. (1997) 56 Cal.App.4th 1079, 1086 [66 Cal.Rptr.2d 64].)
- Civil Code section 1559 excludes enforcement of a contract by persons who are only incidentally or remotely benefited by the agreement. (Lucas, supra, 56 Cal.2d at p. 590.)
- “Whether a third party is an intended beneficiary or merely an incidental beneficiary to the contract involves construction of the parties’ intent, gleaned from reading the contract as a whole in light of the circumstances under which it was entered. [Citation.]” (Jones v. Aetna Casualty & Surety Co. (1994) 26 Cal.App.4th 1717, 1725 [33 Cal.Rptr.2d 291].)
- Restatement Second of Contracts, section 302, provides:
(1) Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either
(a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or
(b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.
(2) An incidental beneficiary is a beneficiary who is not an intended beneficiary.
This section has been cited by California courts. (See, e.g., Outdoor Services v. Pabagold (1986) 185 Cal.App.3d 676, 684 [230 Cal.Rptr. 73].)
- The burden is on the third party “to prove that the performance [it] seeks was actually promised.” (Garcia v. Truck Insurance Exchange (1984) 36 Cal.3d 426, 436 [204 Cal.Rptr. 435, 682 P.2d 1100]; Neverkovec v. Fredericks (1999) 74 Cal.App.4th 337, 348–349 [87 Cal.Rptr.2d 856].)
1 Witkin, Summary of California Law (10th ed. 2005) Contracts, §§ 685–706
13 California Forms of Pleading and Practice, Ch. 140, Contracts, §§ 140.83, 140.103, 140.131 (Matthew Bender)
5 California Points and Authorities, Ch. 50, Contracts, § 50.132 (Matthew Bender)
27 California Legal Forms, Ch. 75, Formation of Contracts and Standard Contractual Provisions, § 75.11 (Matthew Bender)
2 Matthew Bender Practice Guide: California Contract Litigation, Ch. 19, Seeking or Opposing Recovery As Third Party Beneficiary of Contract, 19.03–19.06