Identification Of Third-Party-Beneficiary Contracts

Third-party-beneficiary Contract refers to a contract where a third party other than the parties to the contract directly obtain the contractual benefits,and enjoy the right of claim against the debtor of the contract.The benefit obtained by the third-party beneficiary includes the claim for payment,and may also include the circumstances in favor of the beneficiary,such as the waiver of the promisor's defence against the beneficiary or the waiver of the claim against the beneficiary,that is,the third party obtaining the defence.In order to realize his benefit,the third-party beneficiary,though not parties to the contract,enjoys the right to sue the debtor directly.The hard part of identifying third-party-beneficiary contract lies in its form and substantive nature.While the absence of legislation and practice of the system in China has increased the difficulty.About form,the third-party-beneficiary contract is not an independent contract type,usually in the form of a stipulation pour autrui,coexisting with the contract categories such as purchase and sales contract,leasing contract,etc.The stipulation only substantially expands the external effect of the contract.The third-party beneficiary's having independent claim is the effect of the contract,but it also serves as the most important element of the definition.Therefore,when the stipulation is not clear enough,identifying the nature of the contract becomes more difficult.About nature,the legitimacy of third-party-beneficiary contract has long been questioned for its breaking the relativity of contract.Actually,although the third-party-beneficiary contract breaks the relativity of the contract,but this kind of limited breakthrough is based on full respect for the will of the parties,improving efficiency at the same time without prejudice to the interests of the parties to the contract and the third party.Although some academics hold the view that Article 64 of the current Contract Law regulates third-party-beneficiary contracts,judicial cases indicate that the article only stipulates a special way of performance,which aims to emphasize the relativity of the contract and does not cover the third-party-beneficiary contract.For the first time,Article 313 Paragraph 2 of Civil Code Draft has truly recognized the third-party-beneficiary contract at the legislative level,due to legal provisions or contractual stipulation.Simple in presentation,it is not conducive to its understanding and application in practice,under the background of lacking experience.Independent value and necessity of its independent existence serve as the premise of recognizing legal relationship as third-party-beneficiary contract.Through the comparison with the approximate system,such as assignment of creditor's right,payment under instructions,agency,Vertrag mit Schutzwirkung für Dritte in Germany,and third party beneficiaries of warranties express or implied in America,the third-party-beneficiary contract embodies its unique advantages which cannot be replaced by other systems.From the beneficiary's point of view,he is not limited by capacity,special relationship with the promisee,etc.,and the nature and scope of its available benefits are more diverse.From the perspective of the promisee,it is not necessary to withdraw completely from the contract relationship,or to attribute the whole legal effect to the principle as an agent.He is free to choose the scope of the interests to be ceded to the third-party beneficiary.From the perspective of the promisor,he owes obligation to the third party because of his promise in the contract,which is conducive to the strict observance of contract.Therefore,the third-party-beneficiary contract system has the value of independent existence,filling the shortcomings of the existing ones.The innovation in Civil Code Draft reflects the independent value of third-party-beneficiary contract.In terms of statutory third-party-beneficiary contracts,several different types of statutory third-party-beneficiary contracts are discussed,including typical ones,such as insurance contracts,trust contracts,contracts of carriage,construction subcontracts.Third-party-beneficiary contract theory can also be used to interpret relations like escrow relationship,the contract of purchase and sales in the financial lease relationship,FRAND terms in SEP,etc.The establishment of the third-party-beneficiary contract at legislative level provides a theoretical basis for these types of contracts that break through relativity,and enables the general rules to be applied in cases where there is no explicit provision in special law.Through combing the legal type,the main functions of the statutory third-party-beneficiarycontracts are extracted: livelihood maintenance,simplification of payment and relief channels,protection of third party's trust and increasing the chance of the actual interest subject to be compensated.Statutory third-party-beneficiary contracts directly reflect the realistic needs,and with the continuous updating of the trading mode,the types of statutory third-party-beneficiary contracts will continue to increase.Identification of the interest contract of the third-party-beneficiary contract has always been the focus of theoretical and practical attention in comparative law,and it is also the problem to be faced in the future judicial practice in China.From the perspective of its legal validity,independent value and special function,we may follow the following steps when judging whether an agreed third-party-beneficiary contract exists.First,The real source of its legal validity is the autonomy of will,which is also embodied in the legislation of comparative law.Therefore,in the determination of the third-party-beneficiary contract,the primary step is to explore the purpose of the contract,evaluating whether the parties' intention is to confer benefit to the third party.Whether the third party's benefit is the direct consequence of the contract can be taken into consideration.Second,the third-party-beneficiary contract has independent value because it cannot be covered by other systems,so it should be applied cautiously as a catch-all system to protect the interests of the third party.Third,from a functional point of view,there is a tendency to identify the contract as a third-party-beneficiary contract when: the contract has the function of safeguarding the third party's life or compensating for the third party's loss;the debtor promises for commercial purposes and the beneficiary substantially assumes the consideration of his due interest.With regard to the legislation model of agreed third-party-beneficiary According to the practice of comparative law,it is suggested that in the process of perfecting the Civil Code Draft,legislators clarify certain circumstances when a contract is supposed to be or not to be identified as a third-party-beneficiary contract by adding provisions in law,the introducing judicial interpretation,putting forward guidance cases or other forms,referring to the experience in comparative law.