Though Sam and Gladys are not parties to the mortgage contract and could therefore be barred by the laws governing the privity of contracts, they have a few options to pursue. The mortgage note was signed by Sam’s father and it is provided that he has been making periodic payments towards the same. This means that he is the one entitled in law to institute legal proceedings in this contract. Sam and Gladys were named in the mortgage note as the intended beneficiaries as opposed to incidental beneficiaries. This is because they immediately occupied the house and started living there after they got married.
The law governing third party beneficiary contracts stipulates that a beneficiary can sue in the enforcement of a contract yet they were not the main parties in the formation of such a contract. In this instance, Gladys can file a third party beneficiary action in order to force Sam’s father to specifically perform his part of the contract in the mortgage. This is because he is the one who signed the mortgage note and promised to be making the periodic payments, which he has been doing since they occupied the house. He can therefore not fail to complete the payments. However, for the court to enforce this contract, Gladys will have to satisfy certain criteria. First of all, she will have to show that Sam’s father had in fact intended to confer the interest to her and her husband and secondly, her name must have been expressly mentioned in the contract note as one of the beneficiaries.
Alternatively, Gladys may choose to apply the doctrine of novation whereby she will be seeking the consent of the contracting parties to replace her name as the beneficiary with that of Shirley because she is the new beneficiary now that she has moved out of the house. For this to happen, she will have to seek the consent of Sam’s father and also the new beneficiary in this case Shirley. After that she can therefore go to court and swear affidavits to enforce the replacement.
The hallmark for all contractual undertakings is the consideration, which in this case has been provided for in form of money. According to the information provided, both contracting parties here are minors. Stanley has bought Garcia’s baseball card collection and has provided the consideration for $1000. The contract at that point has therefore been fully performed. Although both parties are minors, they had the intention to be bound by the terms of the contract. The contract was not between an adult and a minor, which would have been different. Stanley goes ahead to sell the baseball collection to America Collector’s Company for $1,500. By so doing, he appears as a person aged 22 years. Due to his behaviour as an adult, the law will treat him as an adult and the contract will therefore be binding, since the contracting company has provided for the consideration of $1,500 making the contract complete.
Since the two contracts have fully been performed, the parties cannot claim to rescind from the contracts and claim their property back. Garcia cannot claim his collection back since she received her money for the sale of the collection and the collection was sold forward to the America Collector’s Company, which also provided consideration to the seller, Mr Stanley. It therefore follows that the parties must remain bound by the terms and conditions of the contacts, which have hitherto been fully performed.
References
Joubert, D. J. (2008). "Agency and Stipulatio Alteri", Southern Cross: Civil Law and Common Law in South Africa, eds. Reinhard Zimmerman & Daniel Visser. Oxford: Oxford UP, 356.
Sutherland, P. (2006). Third-Party Contracts, European Contract Law: Scots and South African Perspectives, eds. Hector L. MacQueen & Reinhard Zimmermann. Edinburgh: Edinburgh UP, 215-216.
