Donee Beneficiaries—Deckler v. Fowler

A and B contract, A promising B to render at a future date some performance to C. What are the legal relations between A and C? B and C? A hundred years ago the answers to these questions would have required consideration of something called "privity of contract" and might well have been "no legal relations". Today, however, we can, on the basis of many decisions, say with certainty that in most states A owes a contract duty to C on breach of which C may have the usual remedies of a contract obligee.

In now accepted terminology C is a beneficiary of the A-B contract. The legal relations between B and C will vary according to B's purpose in procuring A's promise. If his purpose was to confer upon C a gratuity, C will be described as a donee beneficiary and B is a donor of the right which C acquires against A. If B's purpose was to have rendered to C a performance which will discharge a duty owed by B to C, although in a sense the recipient of a gratuity, C is usually referred to as a creditor beneficiary and for some purposes the previously existing debtor-creditor relationship between B and C is changed to one of surety-creditor, A being regarded as now the principal debtor. The following discussion will be limited to donee beneficiaries.