Florida law permits a person or company to sue under a business contract which that party did not actually agree to because that person or business is a “third-party beneficiary” to the contract. A third-party beneficiary is an entity which receives a benefit under a contract but is not one of the parties that signed that contract. The status of third-party beneficiary permits the non-party standing to sue even though the third-party beneficiary has no obligations under the contract. Generally, for a third-party beneficiary to have standing to sue, the contract itself must clearly express that a benefit is intended to a non-party to the contract. If the contract expressly states that the parties are the only intended beneficiaries to the contract, then there can be no third-party beneficiary. A recent case before Florida’s Fourth District Court of Appeals upheld this principle. Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach. The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, employment litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.
“The doctrine of third-party beneficiaries provides that under certain circumstances, a person may sue to enforce a contract, even though the person is not a party to the contract.” Mendez v. Hampton Court Nursing Ctr., LLC, 203 So. 3d 146 (Fla. 2016). In business litigation, a non-party may qualify as a third-party beneficiary when the following elements are met: “(1) existence of a contract; (2) the clear or manifest intent of the contracting parties that the contract primarily and directly benefit the third party; (3) breach of the contract by a contracting party; and (4) damages to the third party resulting from the breach.” Mendez v. Hampton Ct. Nursing Ctr., LLC, 203 So. 3d 146 (Fla. 2016).
The law of third-party beneficiaries is an issue of contract interpretation. Parties to a business contract are free to enter into nearly any kind of contract. Whether the parties intended to allow a third-party to sue under a contract is a ultimately a question as to whether the parties intended to give that third-party the right to sue for violations under the contract. Contracts cannot reasonably contemplate every possible dispute or circumstantial permutation which may arise. Thus, courts apply the “gap-filler” rules of contract interpretation when the contract does not directly address the dispute. “The parties’ intention governs contract construction and interpretation; the best evidence of intent is the contract’s plain language.” Whitley v. Royal Trails Prop. Owners’ Ass’n, Inc., 910 So. 2d 381 (Fla. 5th DCA 2005).