PJC Business

C ONTRACTS

PJC 101.34

PJC 101.34 Third-Party Beneficiaries (Comment)

A third party may enforce an agreement as a beneficiary to that agreement if the contracting parties (1) “intended to secure a benefit to th[e] third party” and (2) “entered into the contract directly for the third party’s benefit.” First Bank v. Brumitt , 519 S.W.3d 95, 102 (Tex. 2017). See also Basic Capital Management, Inc. v. Dynex Commercial, Inc. , 348 S.W.3d 894, 900 (Tex. 2011) (quoting MCI Telecommunica tions Corp. v. Texas Utilities Electric Co. , 995 S.W.2d 647, 651 (Tex. 1999)); City of Houston v. Williams , 353 S.W.3d 128, 145 (Tex. 2011). The “intention to contract or confer a direct benefit to a third party must be clearly and fully spelled out or enforce ment by the third party must be denied.” Basic Capital Management, Inc. , 348 S.W.3d at 900 (quoting MCI Telecommunications Corp. , 995 S.W.2d at 651). It is presumed that parties contract solely for themselves; “only a clear expression of the intent to create a third-party beneficiary can overcome that presumption,” and doubts regarding the parties’ intent “must be resolved against conferring third-party beneficiary status.” First Bank , 519 S.W.3d at 103; Sharyland Water Supply Corp. v. City of Alton , 354 S.W.3d 407, 420 (Tex. 2011). A court will not create a third-party beneficiary contract by implication. Basic Capital Management, Inc. , 348 S.W.3d at 900. It is not enough that the third party would benefit—whether directly or indirectly— from the parties’ performance, or that the parties knew that the third party would ben efit. First Bank , 519 S.W.3d at 102; Sharyland Water Supply Corp. , 354 S.W.3d at 421. Nor does it matter that the third party intended or expected to benefit from the con tract, for only the “intention of the contracting parties in this respect is of controlling importance.” First Bank , 519 S.W.3d at 102 (quoting Banker v. Breaux , 128 S.W.2d 23, 24 (Tex. 1939)). Form of question. Ordinarily, construction of an unambiguous written instru ment to determine third-party-beneficiary status is a question of law for the court. See First Bank , 519 S.W.3d at 105–06 (court should determine whether agreement is ambiguous and whether it “clearly, fully, and unequivocally express[es] the parties’ mutual intent” to confer third-party-beneficiary status); Basic Capital Management, Inc. , 348 S.W.3d at 900. When deciding whether the parties to an unambiguous con tract intended to create a third-party beneficiary, the court must look solely to the con tract’s language construed as a whole. First Bank , 519 S.W.3d at 106. If the court determines the agreement is ambiguous such that there is a fact issue regarding whether the contracting parties intended to confer third-party-beneficiary status on a nonparty, the Committee recommends that the following question be sub mitted to the jury: QUESTION ______

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