Third Parties

Article 6.110 (ex art. 2.115) - Stipulation in Favour of a Third Party 338

(1) A third party may require performance of a contractual obligation when its right to do so has been expressly agreed upon between the promisor and the promisee, or when such agreement is to be inferred from the purpose of the contract or the circumstances of the case. The third party need not be identified at the time the agreement is concluded. 339

(2) If the third party renounces the right to performance the right is treated as never having accrued to it. 340

(3) The promisee may by notice to the promisor deprive the third party of the right toperformance unless: 341

(a) the third party has received notice from the promisee that the right has been made irrevocable, or 342

(b) the promisor or the promisee has received notice from the third party that the latter accepts the right. 343

Article 7.106 (ex art. 2.116) - Performance by a Third Person 376

Article 7.106 (ex art. 2.116) - Performance by a Third Person 376

Article 7.106 (ex art. 2.116) - Performance by a Third Person 376

(1) Except where the contract requires personal performance the obligee cannot refuse performance by a third person if: 377

(a) the third person acts with the assent of the obligor; or 378

(b) the third person has a legitimate interest in performance and the obligor has failed to perform or it is clear that it will not perform at the time performance is due. 379

(2) Performance by the third person in accordance with paragraph (1) discharges the obligor. 380

Article 8.107 (ex art. 3.107) - Performance Entrusted to Another 434

Article 8.107 (ex art. 3.107) - Performance Entrusted to Another 434

A party who entrusts performance of the contract to another person remains responsible for performance.

CHAPTER 14 - CONTRACT BENEFICIARIES

§ 302 Intended and Incidental Beneficiaries (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.

§ 303 Conditional Promises; Promises Under Seal The statements in this Chapter are applicable to both conditional and unconditional promises and to sealed and unsealed promises.

§ 304 Creation of Duty to Beneficiary A promise in a contract creates a duty in the promisor to any intended beneficiary to perform the promise, and the intended beneficiary may enforce the duty.

§ 305 Overlapping Duties to Beneficiary and Promisee (1) A promise in a contract creates a duty in the promisor to the promisee to perform the promise even though he also has a similar duty to an intended beneficiary. (2) Whole or partial satisfaction of the promisor's duty to the beneficiary satisfies to that extent the promisor's duty to the promisee.

§ 306 Disclaimer by a Beneficiary A beneficiary who has not previously assented to the promise for his benefit may in a reasonable time after learning of its existence and terms render any duty to himself inoperative from the beginning by disclaimer.

§ 307 Remedy of Specific Performance Where specific performance is otherwise an appropriate remedy, either the promisee or the beneficiary may maintain a suit for specific enforcement of a duty owed to an intended beneficiary.

§ 308 Identification of Beneficiaries It is not essential to the creation of a right in an intended beneficiary that he be identified when a contract containing the promise is made.

§ 309 Defenses Against the Beneficiary (1) A promise creates no duty to a beneficiary unless a contract is formed between the promisor and the promisee; and if a contract is voidable or unenforceable at the time of its formation the right of any beneficiary is subject to the infirmity. (2) If a contract ceases to be binding in whole or in part because of impracticability, public policy, non-occurrence of a condition, or present or prospective failure of performance, the right of any beneficiary is to that extent discharged or modified. (3) Except as stated in Subsections (1) and (2) and in § 311 or as provided by the contract, the right of any beneficiary against the promisor is not subject to the promisor's claims or defenses against the promisee or to the promisee's claims or defenses against the beneficiary. (4) A beneficiary's right against the promisor is subject to any claim or defense arising from his own conduct or agreement.

§ 310 Remedies of the Beneficiary of a Promise to Pay the Promisee's Debt; Reimbursement of Promisee (1) Where an intended beneficiary has an enforceable claim against the promisee, he can obtain a judgment or judgments against either the promisee or the promisor or both based on their respective duties to him. Satisfaction in whole or in part of either of these duties, or of a judgment thereon, satisfies to that extent the other duty or judgment, subject to the promisee's right of subrogation. (2) To the extent that the claim of an intended beneficiary is satisfied from assets of the promisee, the promisee has a right of reimbursement from the promisor, which may be enforced directly and also, if the beneficiary's claim is fully satisfied, by subrogation to the claim of the beneficiary against the promisor, and to any judgment thereon and to any security therefor.

§ 311 Variation of a Duty to a Beneficiary (1) Discharge or modification of a duty to an intended beneficiary by conduct of the promisee or by a subsequent agreement between promisor and promisee is ineffective if a term of the promise creating the duty so provides. (2) In the absence of such a term, the promisor and promisee retain power to discharge or modify the duty by subsequent agreement. (3) Such a power terminates when the beneficiary, before he receives notification of the discharge or modification, materially changes his position in justifiable reliance on the promise or brings suit on it or manifests assent to it at the request of the promisor or promisee. (4) If the promisee receives consideration for an attempted discharge or modification of the promisor's duty which is ineffective against the beneficiary, the beneficiary can assert a right to the consideration so received. The promisor's duty is discharged to the extent of the amount received by the beneficiary.

§ 312 Mistake as to Duty to Beneficiary The effect of an erroneous belief of the promisor or promisee as to the existence or extent of a duty owed to an intended beneficiary is determined by the rules making contracts voidable for mistake.

§ 313 Government Contracts (1) The rules stated in this Chapter apply to contracts with a government or governmental agency except to the extent that application would contravene the policy of the law authorizing the contract or prescribing remedies for its breach. (2) In particular, a promisor who contracts with a government or governmental agency to do an act for or render a service to the public is not subject to contractual liability to a member of the public for consequential damages resulting from performance or failure to perform unless (a) the terms of the promise provide for such liability; or (b) the promisee is subject to liability to the member of the public for the damages and a direct action against the promisor is consistent with the terms of the contract and with the policy of the law authorizing the contract and prescribing remedies for its breach.

§ 314 Suretyship Defenses An intended beneficiary who has an enforceable claim against the promisee is affected by the incidents of the suretyship of the promisee from the time he has knowledge of it.

§ 315 Effect of a Promise of Incidental Benefit An incidental beneficiary acquires by virtue of the promise no right against the promisor or the promisee.

II. Invalidity of Transactions

Article 166. Contested and Null Transactions

Article 166. Contested and Null Transactions

1. A transaction shall be invalid on the grounds established by this Code, or by virtue of being deemed as such by a court (contested transaction), or irrespective of such deeming (null transaction).

2. A claim to deem a contested transaction to be invalid may be brought by the persons specified in this Code.

A claim to apply consequences of the invalidity of a null transaction may be presented by any interested person. The court shall have the right to apply such consequences at its own initiative.

Article 308. Parties to Obligation

1. One or simultaneously several persons may participate in an obligation as each of its parties, i.e. creditor or debtor.

The invalidity of the creditor's claims with regard to one of the persons participating in an obligation as a debtor, and likewise the expiry of the limitation period with regard to the claim against such person, shall not in and of itself affect his claims against the other such persons.

2. If each of the parties to a contract bears a duty in favor of the other party, it shall be considered the debtor of the other party in what it is obliged to do to the its benefit and, simultaneously, the creditor thereof in what it has the right to demand from it.

3. An obligation shall not create duties for persons who are not participating therein as parties (for third persons).

In the instances provided for by a law, other legal acts, or by agreement of the parties, an obligation may create rights for third persons with respect to one or both parties to the obligation.

Article 313. Discharge of the Obligation by the Third Person

Article 313. Discharge of the Obligation by the Third Person

Article 313. Discharge of the Obligation by the Third Person

1. The discharge of the obligation may be imposed by the debtor upon the third person, unless the debtor's duty to discharge the obligation in person follows from the law, from the other legal acts, from the terms of the obligation or from its substance. In this case the creditor shall be obliged to accept the discharge, offered by the third person instead of by the debtor. 2. The third person, undergoing the threat of losing his right to the property of the debtor (the right of the lease, of the mortgage, etc.) as a result of the creditor's turning the penalty onto this property, may at his own expense satisfy the creditor's claim without obtaining the debtor's consent. In this case, the rights of the creditor by the obligation shall pass to the third person in conformity with Articles 382-387 of the present Code.

Article 430. Contract to Benefit of Third Person.

1. A contract to the benefit of a third person shall be deemed to be a contract in which the parties have established that a debtor is obliged to make performance not to the creditor, but to a third person specified or not specified in the contract and having the right to demand performance of the obligation to his benefit from the debtor. General Formation Parties Validity Agreed obligations Mandatory obligations Termination Remedies 107

2. Unless otherwise provided by a law, other legal acts, or by contract, from the moment the third person has expressed to the debtor an intention to take advantage of his right under the contract, the parties may not dissolve or change the contract concluded by them without the consent of the third person.

3. A debtor in a contract shall have the right to raise against the demand of the third person objections which he could have raised against the creditor.

4. When a third person has waived a right granted to him under the contract, the creditor may take advantage of this right unless this is contrary to a law, other legal acts, or to contract.