Law Commons^™

Third-Party Beneficiaries And Contractual Networks, Alan Schwartz, Robert E. Scott

Faculty Scholarship

An increasing trend of economic agents is to form productive associations such as networks, platforms, and other hybrids. Subsets of these agents contract with each other to further their network project and these contracts can create benefits for, or impose costs on, agents who are not contract parties. Contract law regulates third party claims against contract parties with the third-party beneficiary doctrine, which directs courts to ask whether the contracting parties "intended" to benefit a particular third party. We show here what courts do with third party claims when network members fail to perform for third parties and what the …