Third Parties as Beneficiaries of Contractors' Surety Bonds

Abstract

The American Law Institute has tentatively adopted the two following general rules: "A gift promise in a contract creates a duty of the promisor to the donee beneficiary to perform the promise. This duty can be enforced by the donee beneficiary for his own benefit." "A promise to discharge the promisee's duty [to another person] creates a duty of the promisor to the creditor beneficiary to perform the promise." Around these statements is built up a system of other rules governing the relations of the beneficiary with both the promisor and the promisee. These rules represent the presently existing American law; but it has been arrived at only after more than a century of litigation, with an immense amount of conflict in decision and in the forms in which the law has been stated by the courts. These conflicting decisions and statements fill our reports and are still cited indiscriminately as authority, thus propagating further litigation and conflict.