Friday, December 27, 2013

The Cretex Companies, Inc. v. Construction Leaders, Inc. case brief

The Cretex Companies, Inc. v. Construction Leaders, Inc. case brief summary
342 N.W.2d 135 (1984)

Defendant challenged a judgment of the District Court of Anoka County (Minnesota) that plaintiffs were entitled to recover from it as intended third-party beneficiaries under a defaulting contractor's performance bond.

Plaintiffs sought to recover the costs of materials for a construction project from defendant, their contractor's surety, arguing that they were intended third-party beneficiaries of the performance bond. They argued that the terms of the original construction contracts were incorporated by reference into the bond, and that one of those terms stated that the contractor would provide all materials, which meant that defendant was liable for their claims. Defendant argued that plaintiffs could not recover, because they were not parties to the bond and it was not created to benefit them.

The court found that plaintiffs were not intended third-party beneficiaries, because the bond's language did not evidence an intent to benefit them, and its performance did not discharge any duty owed them.

The court reversed the judgment, holding that plaintiffs were not intended third-party beneficiaries under the performance bond, because the language of the bond did not indicate such intent.

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