Third-party beneficiary breach cases may occur from time to time in the course of your business, whether you are one of the actual parties to the underlying commercial contract, or your business is the third-party beneficiary.
A recent case from Miami is a very useful reminder that the law in Florida establishes some specific requirements in order for an alleged third-party to proceed with a breach of contract claim. If you are in the position of the third party, it is exceptionally important to be sure you have the right allegations in your court papers to cover all of the mandatory elements. If you are a defendant, your business may be able to use a shortcoming in one or more of these essential areas to get the case dismissed. Either way, it pays to have a South Florida commercial litigation attorney on your side who is experienced in these kinds of cases.
That recent Miami case involved a high-end vacation rental business that alleged that it was a third-party beneficiary to a contract, that a breach of that contract had occurred and that the breach has caused it to suffer damages.
Florida law requires the following allegations from an alleged third party suing for breach:
- the existence of a contract;
- the clear or manifest intent of the contracting parties that the contract primarily and directly benefit the third party;
- breach of the contract by a contracting party; and
- damages to the third-party resulting from the breach;
Courts have also stated that an alleged third party must also prove that “the contract clearly expresses an intent to primarily and directly benefit the third party or a class of persons to which that party belongs.” Many times, the proof of this clear intent is contained in the plain language of the contract itself, and if the contract’s language doesn’t explicitly state an intent to benefit a third party (or parties,) then that may be a very strong piece of evidence in your favor if you are defending against an alleged third-party beneficiary’s claims of breach.
The law is clear that a contract must intend to benefit a third party directly and primarily and must so say so clearly. Another fairly recent case also made it clear that you also can include language in your commercial contract that explicitly excludes someone from claiming third-party status. In 2017, the Third District Court of Appeal said that such language is enforceable. Just like the vacation property company’s case, the key is to make sure that the contractual agreement is clear about whom it intends to benefit as a third party, and whom it intends to exclude.
Each commercial contract brings with it its own unique set of potential benefits and potential risks. If one of your agreements has led to litigation, you need to be sure you have legal counsel that can deliver results. The knowledgeable South Florida commercial litigation attorneys at Stok Kon + Braverman are ready to help, having successfully represented businesses throughout South Florida for many years.
Contact us online or by calling (954) 237-1777 to schedule your consultation and find out how this firm can help you.