A person who receives a right or benefit from a K should be able to enforce that benefit in their own right.
The K'ing parties chose to give 3rd party a right. The right belongs to them. See CCC 1443 and 1444.
3rd parties may enforce terms of agreement that provide them a benefit.
Note that no one may bind a third person without their consent. This would be slavery.
CVL - General Motors Products of Canada Limited v. Kravitz [1979] 1 S.C.R. p. 323 CB
Jurisdiction
Quebec
Facts
Kravitz bought car from GM dealer, Planmodon. Complained of defects on receipt of car. Planmodon made repairs to vehicle with GM's knowledge on several occasions, never able to fix problem. Kravitz returns car, is reimbursed purchase price. Brought action against Planmodon and GM seeking nullity of K of sale, refund of purchase price and damages. Superior court found in favor of Kravitz, reduced damages. Court of Appeal upheld judgment. GM appealed to SCC on point of law, questioning extent of liability of manufacturer to purchaser for latent defects.
Issues
Are manufacturers liable for latent defects in products? Can this liability be actioned by subsequent purchasers?
Holding
Yes and Yes
Reasoning
Reasoning: manufacturers liable for latent defects in products: Code Civil du bas-Canada article 1527 (don't have CCC on me, someone look up the concordance?) Can Kravitz avail himself of this article? Raises 3 issues: 1) GM has a no warranty stipulation in K of sale 2) GM offers conventional warranty which allows only replacement or repair, not damages 3) K between GM and Planmodon contains implied warranty of a. 1527. Kravitz not party to K.
No warranty stipulation: Stipulation in K seeks to repudiate 1527. Important not to allow a professional seller (either GM or Planmodon) to take advantage of a non-professional buyer. Manufacturer and seller have duty to inform non-professional buyer of defects in product, 1527 creates presumption they know of latent defects. This duty can not be contracted out of.
Conventional warranty: Conventional warranty effectively contracts out of duty imposed by 1527. Illegal and therefore null and void.
Does 1527 apply only between manufacturer and seller, or can customer avail himself? Some rights so closely associated with a thing as to follow it. Warranty against latent defects is tied to the thing, follows it to successive purchasers.
Ratio
Manufacturers are liable to subsequent purchasers for latent defects.
CML Approach
All contracts must be bargained for – the consideration is the price of the contract
3rd parties receive a benefit without consideration
There is therefore no K to which 3rd person is a party – they are a stranger to the contract
Accordingly, third parties have no right to sue for damages or performance. The contracting party must sue for them.
Related problem: Damages restore the aggrieved party to the state they were in but for the breach. Where A has promised to B to --pay C for B's service, if A does not pay, what is B's loss? Nothing! B was not to receive any payment at all. Therefore, B can only receive nominal damages.
This is seen as grossly unfair: A gets benefit of the bargain without cost. CML solution has been to allow B to sue for specific performance in equity.
CML - Beswick v. Beswick, [1966] 3 WLR 396
Jurisdiction
UK
Facts
Peter Beswick was a coal merchant in Lancanshire – no business premises, just scales and weights. His nephew, Joseph Beswick, helped him in the business. As Peter was old and ill, Joseph wanted to have the business transferred to him before Peter died so they drafted an agreement. Business would be transferred to Joseph who had to employ Peter as a consultant for L6 a week and after Peter’s death, pay widow an annuity of L5 a week from the business. Joseph honoured the agreement including paying widow once P died but stopped paying her after a while. She sued, claiming specific performance (want the appointment of a receiver)
Issues
Can wife sue in her own right or is she barred by privity and thus sue only as administratrix of estate?
The rule that “no third person can sue on a contract to which he is not party” is just a procedural rule: “It goes to the remedy, not to the underlying right”
Denning believes that the contract was binding unless there was fraud or inducement of some sort
Refers to Dutton v. Poole (CML) in 1678 where a father promised a son that he wouldn’t cut down the trees on the land as long as the son paid L10 000 to the daughter. When the father died, the son refused to pay and the daughter sued and won case showed that both the executor and the one harmed can sue
Although a third person cannot as a rule sue in his/her own name, s/he can bring the action in the name of the contracting party suing the other party for breach of the promise
CML says you have to pay – third person can sue in equity to enforce the contract
Promise by nephew to pay widow was “thing in action” s. 205 of Law of Property Act statute and could be enforced by action of the contracting party
