Research On Issues Of The Contract For The Benefit Of Third Party

The contract for the benefit of third party is the contract in which the parties agree that one of the contract's party pays to the third party and the third party directly obtains rights of claim. Such contract is the exception and breakthrough of the doctrine of the relativity of contract and the third party is given contractual rights. Due to the breadth and complexity of modern social and economic life, the doctrine of the relativity of contract has been difficult to meet the need of social interests. Therefore, the contract law has unceasingly expanded the effect of contracts since modern times. With the efforts of doctrine, jurisprudence and legislative, the system of the contract for the benefit of third party was established at last. Nowadays, this kind of contract has been recognized in most countries and regions, which has been widely applied in socio-economic exchanges. However, there is no regulation about the contract for the benefit of third party in our present legislation. The difficulties encountered in judicial practice request that the system of the contract for the benefit of third party should be established as soon as possible.In addition to the introduction and the conclusion, this article is composed of four parts:The first part is the elaboration about the relationship between the contract for the benefit of third party and the doctrine of the relativity of contract. This is the foundation and premise of the whole article. Firstly, the author gives the definition about the contract for the benefit of third party, and distinguishes between the broad and narrow sense contract. It is pointed out that this thesis only discusses narrow sense contract and tells the three important characteristics of the contract for the benefit of third party. Secondly, the thesis gives the outline of the doctrine of the relativity of contract and explains its meaning, formation, development and important position in two big legal systems. It points out that the doctrine of the relativity of contract is the unshakeable principle of contract law, which is strictly followed in two big legal systems. There is important theoretical basis for this principle. Finally, it analyzes the breakthrough of doctrine of the relativity of contract and the production of the contract for the benefit of third party. With the development of socio-economic life, it can not satisfy social interests if the doctrine of the relativity of contract is strictly abided by. Modifications have been made to the doctrine of the relativity of contract. Through inspection about the legislation and jurisprudence in two big legal systems, it explains the gradual breakthrough of the doctrine of the relativity of contract and formation and development of the contract for the benefit of third party.In the second part, it makes the analysis regarding some basic problems about the system of the contract for the benefit of third party. Firstly, it introduces the rationality of the contract for the benefit of third party, which is also the reason why the contract for the benefit of third party can break the doctrine of the relativity of contract and can be accepted by most countries' civil law. The thesis points out its three big rationalities: it is conducive to the realization of parties'expression freedom, the protection of third party's trust interests and the conservation of transaction costs and prevention from business risks. Secondly, it clarifies the elements of the contract for the benefit of third party. In addition to the general conditions of the common contract, this contract must have two special elements: one is that the fundamental contract must be legitimate and effective. The validity of the contract for the benefit of third party depends on the validity of the fundamental contract. Only if the fundamental contract is legitimate and effective, the contract for the benefit of third party can exist. The other is that the parties must agree that the third party can directly obtain the creditor's rights. This is the essential element of this kind of contract. Thirdly, the thesis compares the contract for the benefit of third party with five other similar systems. It points out their differences.In the third part, it makes the theoretical analysis about the validity of the contract for the benefit of third party. Firstly, it discusses the effect of the contract to the third party, which is mainly related to the achievement of the third party's rights, the third party's rights and obligations. By comparison, the thesis points out that the expression of the third party to enjoy the rights should not be taken as the condition of achievement of rights. But it can make the third party's rights settled and make the contract parties not arbitrarily change or cancel the contract. The third party's rights mainly contain the right to request payment and the right to request protection. Apart from some attendant obligations for the purpose of the contract, the third party has no other obligations. Secondly, the thesis deals with the effect of the contract to creditors. It points out that creditor's right to request payment and right to request protection, which make the difference with the third party's rights. Creditor's obligation is mainly guaranteeing that the debtor pays to the third party and assisting the debtor to fulfill the duty. Lastly, it elaborates the effect of the contract to the debtor. The debtor's rights are mainly the right to defend and the right to rescind. All the defenses based on the contract may be used by the debtor against the third party. If the third party is late to deliver or refuses delivery, or the creditor dose not fulfill the duty, the debtor is entitled to rescind the contract. The debtor's obligation is to comprehensively and suitably fulfill contractual duty according to the principle of good faith. If the debtor inappropriately discharges or defaults his duty, he should undertake civil liability. Once the debtor violates the contractual obligations, he has to assume responsibility for breach.The fourth part introduces our present legislation situation of the contract for the benefit of third party and the countermeasures. Firstly, it analyses the actual situation of our system of the contract for the benefit of third party and problems that exist in our legislation. China's Contract Law still entirely takes the doctrine of the relativity of contract as an important and basic rule. There is no regulation about the contract for the benefit of third party in our Contract Law. The regulations are only in some single law. The imperfect legislation causes difficulties in judicial practices. In reality, there are a lot of contracts for the benefit of third party. Because of the lack of legislation, the court is unable to make the decision according to the principle of the contract for the benefit of third party. Secondly, after the analysis of our current problems, it tells the need to build the system of the contract for the benefit of third party. This thesis presents some feasible proposals to address the problems, which are about improving our legislation about the contract for the benefit of third party as soon as possible. It puts forward specific proposals on the establishment of the system, discussing its position and the specific provisions in our future Civil Code.In conclusion, we should make the general rules about the contract for the benefit of third party to meet the needs of socio-economic development. Acknowledging the contract for the benefit of third party dose not conflict with doctrine of the relativity of contract, it is consistent with autonomous spirit of the civil law.