The Puzzle of the Beneficiary’s Bargain

Article by Nicholas Cornell

This Article describes a jurisprudential puzzle—what I call the puzzle of the beneficiary’s bargain—and contends that adequately resolving this puzzle will require significant revisions to some of the ways that we think about contract law.  The puzzle arises when one party enters into two contracts requiring the same performance and the promisee of the second contract is the third-party beneficiary of the first.  For example, a taxi driver contracts with a woman to transport her parents from the airport and then separately enters into a contract with the parents to transport them.  Is the second contract valid and enforceable, or does it fail for lack of consideration?  This specific question—on which courts have split—implicates several important contract law doctrines.  Moreover, it highlights a deep tension in our modern understanding of contractual obligation.  This Article argues that adequately resolving the puzzle necessitates a general reconsideration of the relationship between rights and liability in contract law.  Surprisingly, the best solution requires abandoning the foundational understanding that contract liability arises out of breach of a promisee’s right to performance.  This relatively specific puzzle thus offers a lens through which to examine general concepts of modern contract law.

About the Author

Assistant Professor, Legal Studies and Business Ethics Department, The Wharton School, University of Pennsylvania.


90 Tul. L. Rev. 75 (2015)