15. Can the dealership enforce the mother's promise to her son?

A contract generally only confers rights and imposes duties on the parties to the contract, not anyone else. However, an exception exists where a «third-party beneficiary» benefits from a contract made between two parties, and the two contracting parties intended to benefit that third party. The third party is not a party to the contract, but nevertheless has standing to enforce rights under the contract because it was made with an intent to benefit him.

The «intended» third party beneficiary is either: (i) one who, if the promise is performed, it will satisfy some obligation of money owed to that third party; or (ii) circumstantial facts indicate that one of the parties intends to give the third party the benefit of a promised performance.

In determining whether a third party is an intended beneficiary, the court will examine several factors, including whether: (i) the beneficiary could have reasonably relied on the fact that a purpose of the contract was to confer a right to him; (ii) performance is supposed to run directly from a contracting party to the third party, rather than from the promisor to the promisee and only indirectly benefitting the third party; and (iii) if part of the overall objective of the parties to the contract was to benefit the third party.

Incidental third-party beneficiaries are those who may benefit from the contract, but that is not the primary purpose of the contract. These incidental beneficiaries have no contract rights, even though they may have received a gift or some other benefit from one of the contracting parties.

The doctrine of promissory estoppel is a promise that the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and that it does induce such action or forbearance. Such a promise binding if injustice can be avoided only by enforcement of the promise.

The Statute of Frauds requires certain contracts to be in writing and signed by the parties bound by the contract. The suretyship provision under the Statute of Frauds applies when someone makes a promise to be responsible for or guarantee the debt another person owes to a creditor. However, this provision does NOT apply where the surety promise was made to the principal or debtor, not to the obligee. See Rest. 2d § 552-55.

B is correct. The mother's oral promise to her son, supported by valid and sufficient consideration, was to pay «anyone» (i.e., the individual or entity) who sells a minivan to her son «within the next six months the full purchase-price thereof.» This promise explicitly intended for the performance (conferring the benefit of the payment for the minivan) to run to the third party who sold the minivan to the son. This is sufficient for the dealership to have standing to enforce its rights under the promise as an intended third-party beneficiary.

A is incorrect. This answer reaches the correct answer with the wrong reasoning. The dealership can enforce its rights under the promise, but not because of the doctrine of promissory estoppel. The facts state that the dealership was not aware of the mother's promise at the time it sold the minivan to the son. Promissory estoppel would have required the dealership to not only have been aware of the promise before selling the minivan, but also to have reasonably relied on it to such an extent that justice requires enforcement of it. Promissory estoppel does not apply here, nor is it necessary because the dealership can recover as an intended third-party beneficiary, as explained above.

C is incorrect. The Statute of Frauds does require certain suretyship agreements to be reduced to writing in order to be enforceable. However, an important exception applies in this case. The mother (the promisor) promised her son (the debtor) that she would repay his debt to a third party. She did not make this promise directly to the dealership (the obligee), which would have required a writing to be enforceable. Because the promise was made between the promisor and the debtor, the Statute of Frauds does not apply.

D is incorrect. This answer choice implies that the dealership was only an incidental beneficiary, rather than an intended beneficiary because it was not identified or aware of the promise. However, the dealership was, in fact, an intended beneficiary because the contract clearly intended to confer a benefit to the party who sold the minivan to the son and performance was to run directly to that third party. Had no such promise to pay a third party been included in the agreement, the dealership may have only been incidental.