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St. Thomas Law Review

First Page

496

Document Type

Article

Abstract

Donee beneficiaries are pretty peculiar. They own the rights created by a contract created by others. Their rights have primacy over the promisee's rights' but the promisees have enforceable rights as well. The donee beneficiaries may be totally unaware of these enforceable rights for which they have not given consideration. For purposes of this essay, "donee beneficiary" means any intended beneficiary other than a creditor beneficiary. A creditor beneficiary is a promisor who assumes a debt that "will satisfy an obligation of the promisee to pay money to the beneficiary . ... " Thus defined, third party donee beneficiaries are of importance in commercial activity, for example, in an agreement between parent and subsidiary to indemnify a class of individuals. Today, the concept of donee beneficiary has expanded from the intent to create a gift, to anytime there is an intent gratuitously to confer a right other than a right caused by the assumption of a debt owed by the promisee. Parol evidence of one's status as donee beneficiary is the subject of this essay. I do not advocate in this article for any particular version of the parol evidence rule. Once the donee beneficiary is identified, the contract should be subject to the parol evidence rule as any contract. Whether the parol evidence rule in the appropriate jurisdiction is soft or hard, the peculiar nature of the donee beneficiary merits that parol evidence ought to be welcomed and admitted. The status of donee beneficiary should be exempt from all formulations of the parol evidence rule. At the very least, evidence of surrounding circumstances should be admissible as it is in some jurisdictions in donee beneficiary cases.

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