LAW 506-002 – Contracts II

Restatement Second of Contracts § 309


Defenses Against the Beneficiary

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  1. A promise creates no duty to a beneficiary unless a contract is formed between the promisor and the promisee; and if a contract is voidable or unenforceable at the time of its formation the right of any beneficiary is subject to the infirmity.
  2. If a contract ceases to be binding in whole or in part because of impracticability, public policy, nonoccurrence of a condition, or present or prospective failure of performance, the right of any beneficiary is to that extent discharged or modified.
  3. Except as stated in Subsections (1) and (2) and in [R2C § 311] or as provided by the contract, the right of any beneficiary against the promisor is not subject to the promisor's claims or defenses against the promisee or to the promisee's claims or defenses against the beneficiary.
  4. A beneficiary's right against the promisor is subject to any claim or defense arising from his own conduct or agreement.