Lawrence v. Fox
20 N.Y. 268, 1859 N.Y.

Facts:

Holly loaned Fox $300 to give to Lawrence. Apparently Fox didn’t give him the money, and Lawrence sued.

Issue:

Can a third party maintain an action to enforce a benefit promised to him in a contract not entered into by him directly?

Holding:

Yes.

Reasoning:

An intended  beneficiary, but not an incidental beneficiary, may sue for breach of the contract of which she is a beneficiary.

  • Unless otherwise agreed between the promisor and promisee, a beneficiary of the promise is an intended beneficiary if

(1) the promise is to pay money to the beneficiary that the promisee owes the beneficiary (so-called “creditor beneficiary”); or
(2) the circumstances indicate that the promisee intends the beneficiary to receive the benefit of the promised performance (so-called “donee beneficiary”).