Brown enters into a written contract with Ideal Insurance Company under which, in consideration of her payment of the premiums

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Brown enters into a written contract with Ideal Insurance Company under which, in consideration of her payment of the premiums

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Brown enters into a written contract with Ideal Insurance Company under which, in consideration of her payment of the premiums, the insurance company promises to pay State College the face amount of the policy, $100,000, on Brown’s death. Brown pays the premiums until her death. Thereafter, State College makes demand for the $100,000, which the insurance company refuses to pay upon the ground that State College was not a party to the contract. Can State College successfully enforce the contract? Why or why not?

Explanation & AnswerSolution by a verified expert

Explanation

An intended beneficiary contract is the expected form of contract for a third party recipient. Contract secrecy between the Insurance company and the Individual B under the policy is not needed. The right comes from Individual B's decision to give a reward to the educational institute, and the insurance company's commitment to Individual B is strictly enforceable by the intended third-party receiver. So, the contract can be enforced by the educational institute.

Sample Response

Yes, the contract can be enforced by the educational institute because this is an intended beneficiary type of contract performed by a third party. There are no provisions for the privacy of the contract between the promisor ideal and the paying person under the regulation.

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