Opinion ID: 1957495
Heading Depth: 2
Heading Rank: 2

Heading: Privity of Contract

Text: ¶ 21. John Hancock asserts that it was not privy to the contracts between McMo and Plaintiffs and Plaintiffs were not privy to the John Hancock-McMo contract. However, privity is not required to establish contractual obligations. A third party can enforce a contractual provision made primarily for his benefit even if he was not a party to the contract. See Burns v. Washington Sav., 251 Miss. 789, 171 So.2d 322, 324 (1965). As to such third-party beneficiaries, the controlling principle of law ... is that one not a party to a contract can sue for a breach thereof only when the condition which is alleged to have been broken was placed in the contract for his direct benefit. A mere incidental beneficiary acquires by virtue of the contractual obligation no right against the promisor or the promisee. Hartford Accident & Indem. Co. v. Hewes, 190 Miss. 225, 234, 199 So. 93, 95 (1940). See also Yazoo & M.V.R.R. v. Sideboard, 161 Miss. 4, 133 So. 669, 671 (1931) ((1) When the terms of the contract are expressly broad enough to include the third party either by name [or] as one of a specified class, and (2) the said third party was evidently within the intent of the terms so used, the said third party will be within its benefits, if (3) the promisee had, in fact, a substantial and articulate interest in the welfare of the said third party in respect to the subject of the contract.). In other words, for the third person beneficiary to have a cause of action, the contracts between the original parties must have been entered into for his benefit, or at least such benefit must be the direct result of the performance within the contemplation of the parties as shown by its terms. There must have been a legal obligation or duty on the part of the promisee to such third person beneficiary.... connect[ing] the beneficiary with the contract. Burns, 171 So.2d at 325. In making this determination, the primary purpose of [the] provisions, Chic Creations of Bonita Lakes Mall v. Doleac Elec. Co., 791 So.2d 254, 259 (Miss.Ct.App.2000), ought to be considered.
¶ 22. The Negotiate Construction Agreement(s) provision expressly states that, [McMo] will negotiate with the Fabricator/Suppliers mutually selected by [John Hancock] and McMo for the execution of agreements between the Fabricator/Suppliers and [John Hancock].  (emphasis added). Plaintiffs are directly referenced under the terms of the Negotiate Construction Agreement(s) provision as the Fabricator/Suppliers. Clearly, each Plaintiff is a party whose performance was contemplated.
¶ 23. Under the Manage Construction Funds and Pay Applications provision, John Hancock assumed the obligation to pay Plaintiffs, albeit through McMo. John Hancock has admitted as much, by its declaration in the Florida proceeding against McMo, supra. Therefore, Plaintiffs' status vel non as third-party beneficiaries of the John Hancock-McMo agreement is a contested issue of material fact.