Lone star Life Insurance Co. agreed to make a long-term loan to Five Forty Three Land, Inc., whenever that corporation requested one. Five Forty Three wanted this load to pay off its short-term debts. The loan was never made, as it was never requested by Five Forty Three, which owed the Exchange Bank and Trust Co. on a short-term debt. Exchange Bank then sued Lone Star for Breach of its promise on the theory that the exchange Bank was a third-party beneficiary of the contract to make the loan. Was the Exchange Bank Correct?© BrainMass Inc. brainmass.com October 9, 2019, 11:02 pm ad1c9bdddf
1. A brief restatement of the legal question posed.
Lone Star agreed to loan money to 543 Land Inc. whenever it needed funds. 543 Land would use these funds to pay off its short-term debts. 543 Land owed money to Exchange Bank. Does Exchange Bank have the right to sue Lone Star for the debts as a third party beneficiary?
2. A statement of the applicable law or rule that should be applied to the facts in this case.
The third-party beneficiary statute, provides in pertinent part:
Any person for whose benefit a promise is made by way of contract, as hereinafter defined, has the same right to enforce said promise that he would have had if the said ...
The solution examines Lone Star's breach of its promise on the theory that the exchange bank was a third-party beneficiary of the contract to make the loan. The expert determines if the exchange bank was correct.