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Current Developments in the Commercial Divisions of the
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Posted: September 14, 2015

Wife Third-Party Beneficiary of Contract Signed By Husband

On September 4, 2015, Justice Scarpulla of the New York County Commercial Division issued a decision in Silverboys, LLC v. Skordas, 2015 NY Slip Op. 31711(U), holding that a wife was a third-party beneficiary of a contract signed by her husband.

In Silverboys, the parties’ dispute related to a contract to provide architectural and related services in connection with the development of the plaintiffs’ property. The plaintiffs’ breach of contract claim related to a contract signed by plaintiff Henry Silverman. The defendant moved to dismiss the breach of contract claim as to plaintiffs Karen Silverman, Henry Silverman’s wife, and Silverboys LLC, the entity created by the Silverman’s to own the property. The Court denied the motion on the ground that Karen Silverman and Silverboys LLC were third-party beneficiaries to the contract, explaining:

In determining third-party beneficiary status it is permissible for the court to look at the surrounding circumstances as well as the agreement. Moreover, it is well settled that the obligation to perform to the third party beneficiary need not be expressly stated in the contract.

In the context of a third-party beneficiary claim, the plaintiff must establish: (1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for its benefit, and (3) that the benefit to it is sufficiently immediate to indicate the assumption by the contracting parties of a duty to compensate it if the benefit is lost.

The validity of the contract between [the defendant] and Henry Silverman is not disputed, and the Plaintiffs sufficiently allege that the Silvermans planned to reside in and enjoy the benefits of the Bahamian Property. Therefore, Karen Silverman is not merely an incidental beneficiary. Additionally, Silverboys owned the property and paid [the defendant’s] fees. Under these conditions, Silverboys is also an intended beneficiary.

(Internal quotations and citations omitted).

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