Chapter five
The promise for third party
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SCHOOL OF LAW A THESIS SUBMITTED IN THE, CHALLENGES OF CASE MANAGEMENT IN SOMALILAND HIGH COURT
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- Stipulation for the benefit of a third party : Article 153 Civil Code
- Rights of the stipulator
- Rights of the beneficiary
The promise for third partyA person may stand promisor for a third party by promising his contractual partner that this third party will perform some contractual obligation or respect some omission, Stipulation for the benefit of a third party : Article 153 Civil CodeIt happens quite often that parties to a contract may make stipulations for the benefit of a third party. Stipulations for the benefit of third persons serve to make institutions function or effect transactions, which would be impossible or at least more difficult with all other principles of the law. For instance, life insurance for the benefit of a third party, a collective insurance against accidents by employers for their employees, warranty given by manufacturers for their products to consumers, etc. Rights of the stipulatorThe stipulator is a contracting party, and he may exercise all the rights deriving normally from the contract, such as cancellation for vice of the contract, termination or enforced performance in the event of a non-performance by the promissor. stipulation. This is possible where the option has not been offered to the third party mentioned in the contract; or where the beneficiary after having been offered with the option refuses to accept the benefit of the stipulation. Thus, in principle, the stipulator can change the stipulation for the benefit of a third party into an ordinary (synallagmatic) contract with the promissor thereby reserving the benefit for himself or even designated another beneficiary. Rights of the beneficiaryComing to the rights of the beneficiary, the beneficiary being delegated as the person to receive benefit from the promissor may accept or reject the benefit upon being given the option pursuant to Article 1959 of the Civil Code. For the effectivity of stipulation for the benefit of third persons, it must be "accepted" by the third party beneficiary. The right of the beneficiary is not derived from a contract made by him with the promissor. There are no two successive contracts but only one, i.e. concluded between the promissor and the stipulator. However, once the third person ratifies the stipulation, he shall acquire all the rights the contract bestows upon him. The stipulator may not refuse his appointment once the beneficiary has accepted to receive the benefit stipulated in his favor. This implies that the stipulator will have no right against the promissor regarding that portion which has been stipulated for the benefit of the third person. Moreover, the promissor may not set up against him any defenses of a purely personal nature which he may have against the stipulator as per Article 1961(2) of the Civil Code. However, the English version of this sub Article is defective. The defenses available for the promissor may be incapacity, immorality, unlawfulness .... For instance, A, the seller, and B, the buyer enter into a contract of sale of a house in Addis, which includes the clause that if B stops to live in Harar, the sale will be transferred to C, B's son. If A does not insure the house, C can apply for a court injunction against him to force him to insure it against fire. If the offer is accepted by the beneficiary, he becomes the direct creditor of the promissor and may exercise all the rights deriving from the contract, especially obtain enforced performance form the promissor debtor. Conversely, the promissor may set up against him the defenses open by the contract to resist performance. The only exception is stated under Article 1961(2) of the Civil Code, where the promissor may not oppose to the beneficiary the defenses of a purely personal nature, which he may have against the stipulator (note the omission of the "not" in the English version of the Civil Code). Download 53.56 Kb. Share with your friends:
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