Contracts: Third Party Rights Case No. 86 PRIVITY, THIRD PARTY BENEFICIARIES Ral

Question

Contracts: Third Party Rights Case No. 86 PRIVITY, THIRD PARTY BENEFICIARIES Ralston Purina Company y.Arthur G. McKee &Company;,et al Appellate Division, Fourth Department 158 A.D.2d 969, 551 N.Y.S.2d 720 (1990) FACTS: Plaintiff Ralston Purina Company (Ralston) entered into a contract with defendant Arthur G. McKee & Company (McKee) in which McKee agreed to build a pet food plant. Another defendant, Industrial First Inc. (Industrial), a subcontractor of McKee's, was responsible for the construction of the roof for the plant. The contract between McKee and Industrial extended to Ralston all warranties Industrial made to McKee, and contained an agreement by Industrial to indemnify Ralston for Various problems with the roof developed soon after completion. Ralston sued Industrial for negligence in the construction of the roof and for breach of contract. Industrial claimed that Ralston could not sue it for breach because Industrial and Ralston were not in privity of contract. damages arising out of its construction of the roof. ISSUE: When two parties expressly agree to extend the benefits of their contract to a third party who contract? is not an original party to the contract, can the third party sue to enforce the DECISION: Yes.

Explanation / Answer

Delegation of duties-Duties are not assigned but delegated when they are part of a contract. Almost any duty can be delegated. Delegation is not allowed if the task is delegated to someone not qualified to do the work. Delegation of duties isn't allowed when special trust is placed in the obligor. Duties cannot be delegated if the performance of the third party is very different than the results if performed by the assignee

In an assignment and a delegation, the rights of the third party arise sometime after the original contract has been entered into. In a third-party beneficiary contract, the rights of the third party arise or are contemplated by the contracting parties at the time the original contract is made.

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