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When water began dripping from the ceiling of her unit in the Desert Pines Condominium, Amy immediately contacted the condominium’s board of trustees. The board, in turn, called Fixit, Inc., a company employed by the board to manage the condominium. An inspection revealed that a portion of the condominium’s roof had deteriorated, allowing water to pool above the ceiling of Amy’s unit. Pursuant to its contract with the condominium, Fixit repaired the roof and declared the problem solved. Amy was overjoyed, until her kitchen ceiling collapsed and mold blossomed on walls throughout her unit.
Amy sued Fixit for breach of its contract with the condominium, which required that all repairs be completed in a workmanlike manner. Although she was not a party to the contract, Amy claimed to be a third-party beneficiary of the agreement because she would have benefited if the repairs had been done properly. On these facts, a Massachusetts court would very likely dismiss her contract claim.
Massachusetts courts have adopted Restatement (second) of Contracts, §302 and related sections, governing the rights of third-party beneficiaries. James Family Charitable Foundation v. State Street Bank & Trust Co., 80 Mass. App. Ct. 720, 723 (2011), citing Rae v. Air–Speed, Inc. 386 Mass. 187, 195–196 (1982). Section 302 states,
(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.
Restatement (Second) of Contracts § 302. As Amy was not a creditor of either party to the management contract, she must satisfy subsection (b) by establishing that the contracting parties intended the contract to benefit her. “In order to recover as a third-party beneficiary, the plaintiffs must show that they were intended beneficiaries of the contract….” Cumis Ins. Society, Inc. v. BJ’s Wholesale Club, Inc., 455 Mass. 458, 464 (2009), quoting Spinner v. Nutt, 417 Mass. 549, 555 (1994).
“Under Massachusetts law, a contract does not confer third-party beneficiary status unless the ‘language and circumstances of the contract’ show that the parties to the contract ‘clear[ly] and definite[ly]’ intended the beneficiary to benefit from the promised performance.” Cumis, 455 Mass. at 466, quoting Anderson v. Fox Hill Village Homeowners Corp., 424 Mass. 365, 366–367 (1997). See also Go-Best Assets, Ltd. v. Citizens Bank of Massachusetts, 463 Mass. 50, 61 n.12 (2012); Alford v. Capitol Realty Group, Inc., 88 Mass. App. Ct. 1106, 2015 WL 5602608, * 2 (9/24/15); Try Switch. Ltd. v. Endurance Intern. Group, 83 Mass. App. Ct. 1131, 2013 WL 2096605, *1 (5/16/13) (unpublished Rule 1:28 opinion); James Family, 80 Mass. App. Ct. at 724.
It is not enough that the plaintiff receives an incidental benefit from the contract. The parties to the contract must have intended such benefit. “That the plaintiffs derive a benefit from a contract between others does not make them intended third-party beneficiaries and does not give them the right to enforce that agreement.” Cumis, 455 Mass. at 464. See also James Family, 80 Mass. App. Ct. at 724 (“In contrast to an intended beneficiary, an incidental beneficiary obtains no right to enforce the contract.”); Restatement (second) of Contracts, §315.
As there is no evidence that either the condominium or Fixit intended their contract to benefit Amy or other unit owners, Amy is not a third-party beneficiary and cannot enforce the contract.
