(b)  The mixed legal systems

number of subsequent cases adopted the same analysis, the position being confirmed in McCullough v. Fernwood Estate Ltd.53 Reference was made in these decisions to Roman-Dutch sources on promise, especially to Grotius and his treatment of promise and its required acceptance.54 This requirement for an acceptance was disputed by the prominent contract scholar J. C. de Wet,55 but this opposition to the established judicial view did not find favour with the courts. Despite this early foundation of the third party’s right in promise, it has been observed that later authorities­ have used a plethora of terminology to describe the third party’s right, not all of it suggestive of a promise.56 The need for an acceptance appears to have favoured a contractual rather than a promissory approach in later cases.

As in Scots law, the intention of the contracting parties to confer the right on the third party was recognised as being required to create the third party’s right; the mere incidental accrual of a benefit by a third party is not enough to create such right. This position emphasises that the doctrine of third party rights in South African law is clearly will-based and not benefit-based.

More recently, the traditional promissory analysis has been criticised by Sutherland and Johnston, who have argued that the

terminology that South African courts use is imprecise and confusing. The cases variously state that the third party must accept a stipulation, promise, contract, benefit, the benefits of the contract, or an offer of a benefit. The only sense that can be made of all these expressions is that the third party accepts an offer. The courts approach then fits perfectly with orthodox principles of contractual liability.57

Such an offer, argue the authors, gives the third party an option to enter into a contract with the party offering to confer the right on the third party.58 The result is two contracts: one between A and B, in which B has promised to confer the right upon C, and one between A and C, formed by the making of an offer by A to C (giving rise to an option) which C must accept to complete the envisaged relationship. This is a bold reinterpretation of the existing South African jurisprudence, though, as the authors recognise, it does not provide the legal system with the mechanism which is suggested by the terminology of a stipulatio alteri.59 Having

53 1920 AD 204.    54  Grotius, De Jure Belli ac Pacis, II.xi.18.

55 De Wet, ‘Die ontwikkeling van die ooreenkoms ten behoewe van ’n derde’. 56  Sutherland and Johnston, ‘Contracts for the Benefit of Third Parties’, p. 214. 57 Ibid., p. 214.    58  Ibid., p. 215.    59  Ibid., p. 215.

characterised the stipulatio alteri as an option, it is somewhat unclear why the authors later choose to describe the true third party contract as ‘sui generis’, as an option does not merit such a description.60

The analysis of Sutherland and Johnston was offered as a way of making sense of a confusing array of judicial analyses by the South African courts of the nature of the stipulatio alteri. In offering their new analysis, however, they might be said too readily to dismiss the inherited Roman-Dutch analysis of the third party as the recipient of a promise, albeit one that has to be accepted before it takes effect. One can appreciate why such a promissory view may be unattractive in the present age: modern South African law does not generally recognise the promise as a distinct and binding obligation. It thinks in terms of contracts, and so any continued description of enforceable rights as promissory in nature, rather than contractual, would be to perpetuate an anomalous hangover from an age when the ius commune was still familiar with the idea of the promise. Yet, if South African law were to restore promise to a central position in its law of obligations, as it has been suggested at various points in this work that all the legal systems studied ought to, there would be no need to dismiss a promissory view of the stipulatio alteri. Far from being an anomaly, it would be one example of a number of circumstances which might usefully be analysed in promissory terms. That usefulness, in the field of third party rights, lies not least in the ability to characterise the third party as the recipient of rights only, without the need to conceive of its coming under any duties (though of course if it is desired to burden a third party with duties, then there is nothing to prevent that third party being created as a full contracting party by the normal route).

In Louisiana, following the lead of the somewhat limited provision in the French Civil Code concerning the stipulation pour autrui,61 the Louisiana Civil Code provides that a ‘contracting party may stipulate a benefit for a third person called a third party beneficiary’.62 The Code does

60Ibid., p. 217.

61Code civil Art. 1121 (the terms of which were taken, almost verbatim, from Pothier). Following the lead of Roman law, French law at the time of the drafting of the Code was essentially against the idea of a stipulatio alteri. The terms of Art. 1121 were therefore drafted in a very restricted way, permitting a stipulation pour autrui only where ‘it is the condition of a stipulation which one makes for oneself or of a gift which one makes to another’. Modern French law has been developed by the courts to allow a wide enforcement of third party rights.

62CC Art. 1978.

not require the acceptance of the third party as a constitutive element,63 nor does it insist (as Roman law did) that the stipulator have any interest in the performance to the third party. The Louisiana jurisprudence has located the essentials of the stipulation pour autrui as being a clear intention to benefit the third party, the specification of a clear benefit to be conferred, and a benefit which is not merely an incidental one.64 The codal provision also provides that a manifestation of intention by the third party to avail itself of the benefit prevents the contracting parties from dissolving the contract without the third party’s agreement.65 Such manifestation of consent has the additional effect that the stipulation in favour of the third party cannot be revoked; before this point, the stipulator is able to revoke the stipulation.66 The provisions do not permit any duties to be imposed upon a third party, though in a separate provision (again following the lead of the French Code)67 the Code provides that, if a contracting party promises third party performance and this does not occur, the contracting party is itself liable for such performance.68

The Louisiana Code describes the nature of the right given to the third party as that of demanding performance from the promisor. Beyond that, it does not describe how this right is conferred; specifically, it does not say whether it is conferred by means of a promise. However, given that the provisions in the Louisiana Code derive from those of the French Code, it is generally recognised in Louisiana that, like the French Code, Louisiana’s stipulation pour autrui can be analysed in promissory terms. The promise is conceived of as having been made to the stipulator however, not to the third party beneficiary, that third party being allowed to enforce the promise conceived of in its favour though made to the ­stipulator.69 It is recognised that the stipulation of a third party right may

63Again, this position mirrors that of French law. The French courts had settled in 1888 that the third party’s right comes in to existence at the moment that the promisor has made the promise to the third party: see judgments of February and March 1888, DP 88.1.193.

64See Joseph v. Hospital District No. 2, 939 So 2d 1206 (La 2006). The third of these requirements seems superfluous, given the first requirement of a clear intention to confer the benefit: if a benefit is intentionally conferred, it surely cannot be merely incidental.

65CC Art. 1978.

66CC Art. 1979. If the promisor has an interest in performing, the stipulation cannot be revoked without his consent.

67 Code civil Art. 1120. 68 CC Art. 1977.

69Ibid. In Joseph v. Hospital Service District No. 2, 939 So 2d 1206 (La 2006), Weimer J commented that ‘[a] true third party beneficiary is never a party to the contract in question; he is never a promisee.’ This comment of course equates promisee with contracting party, and (consistently with Louisiana law) does not recognise that there may be unilateral promisees.

amount to a donation, with the result that the donative provisions of the Code ­concerning revocation, reduction, and so forth, apply to such a stipulation.70

In Scots law, the right of a third party to enforce a benefit conceived of by contracting parties was recognised at an early stage in legal ­development.71 In the seminal legal analysis of Scots law, that of Stair, the stipulatio alteri is conceived of as a species of unilateral promise, Stair discussing the jus quaesitum tertio as part of his treatment of such promises. Stair refers to the opinion of the Spanish scholastic Molina in ­support of the stipulatio alteri, and states that

It is likewise the opinion of Molina and it quadrates with our customs that when parties contract, if there be any article in favour of a third party,72 at any time, est jus quaesitum tertio, which cannot be recalled by either or both of the contractors, but he may compel either of them to exhibit the contract, and thereupon the obliged may be compelled to perform.73

The break with Roman law, and the alignment with the natural law tradition of the late scholastics, is significant. Stair’s remarks have not been without subsequent interpretative disputes, however. Specifically, the words ‘which cannot be recalled’ have given rise to a debate as to whether ‘irrevocability’ is a prerequisite in Scots law for the constitution of a jus quaesitum tertio. That was said to be the case by the House of Lords in

Carmichael v. Carmichael’s Executrix,74 a decision thought by many to be based upon a mis-reading of Stair.75 The matter is complicated by confusion about whether the idea of irrevocability relates to the nature of the right conferred, or to the act by which the right is constituted. With that distinction in mind, it seems to be the case that (i) the nature of the right conferred will usually be irrevocable (that is, it is a right which, once

70See Litvinoff and Scalise, Law of Obligations, p. 326.

71Morison’s Dictionary, an early repository of case reports, contains case reports under the heading of jus quaesitum tertio from 1591 onwards.

72The idea of a contract term being ‘in favour of a third party’ seems wide enough to ­encompass both terms conferring a tangible benefit upon a third party, as well as terms conferring a right upon a third party which does not necessarily confer any tangible benefit upon it (for instance, a right to make a determination about the performance of the contract or the obligations of the contracting parties).

73 I.x.5. 74 1920 SC (HL) 195.

75For various views on this matter, see Cameron, ‘Jus Quaesitum Tertio; The True Meaning of Stair I.x.5’; Rodger, ‘Molina, Stair and the Jus Quaesitum Tertio’; MacCormack, ‘A Note on Stair’s Use of the Term Pollicitatio’.

given, cannot be taken back) unless the power of revocation is reserved when the right is first conferred,76 and (ii) as to the act by which the right is conferred, some irrevocable act must occur before the right comes into existence: in an oral contract, such an act is constituted by the third party being informed of the right; in a written contract, either the party must be given a copy of the contract or else some act equivalent to delivery must occur.

The requirement of informing the third party, or of delivering the contract to him, is an additional requirement to those applying in the ordinary law of promises. Given this relatively modern requirement of delivery or an equivalent, it seems that in Scots law the third party can today be seen as being the recipient of a promise made directly to it at the time of such delivery or an equivalent. Before this requirement was added to the law, one might have treated the third party in the same way as any other absent promisee, that is as gaining its promissory right at the very moment that the promisor indicated his intention to be bound (the same moment that the contract between stipulator and debtor is concluded).

As in other systems, the genesis of the third party’s right is said to lie in the intention of the parties to confer the right upon it, a mere incidental benefit being insufficient. It has been said that this intention of the parties may be expressly stated in the contract, or may be implied from it.77 Merely mentioning the third party’s name, as a party affected by the contract, will not be enough of itself to demonstrate such an intention. Arguments about whether such an intention is present is evidently a factual investigation, based upon the specific contract before the court. In Scots law, such arguments have not infrequently arisen in cases involving contract chains, where the argument is advanced that C, a party to contract B–C, was also intended as a third party under contract A–B, often as a means of allowing it to sue for defective performance by A,78 as well as cases involving negative benefits, where C is claiming the benefit of an alleged indemnity from liability.79 Such arguments have usually failed, the courts being unpersuaded that any intention to create C as a third

76As to such as revocable right, see Love v. Amalgamated Society of Lithographic Printers

1912 2 SLT 50 (IH).

77McBryde, Contract, para. 10–12.

78Scott Lithgow Ltd v. GEC Electrical Projects Ltd 1989 SC 412, 1992 SLT 244 (CSOH); Strathford East Kilbride Ltd v. HLM Design Ltd 1997 SCLR 877 (CSOH).

79Aberdeen Harbour Board v. Heating Enterprises Aberdeen Ltd 1990 SLT 416, 1989 SCLR 716 (CSIH).

party existed in the circumstances of the case,80 though the courts have not approved of suggestions that in contract chain cases the very existence of the chain must indicate that parties only intend to confer rights upon those next to them in the chain and not on third parties further up or down the chain.81 Moreover, there is no reason to suppose that the mere possibility of an assignation must be taken to indicate that no third party right could have been intended.

Stair’s conception of the third party’s right as a species of promise has been supported by commentators82 and by the courts. In the leading encyclopaedia­ of the law, The Laws of Scotland, it has been suggested that not only is the party obliged to perform (the debtor) in favour of the third party (the tertius) held to make a promise to the tertius, but that the party requesting performance (the stipulator) may also be considered to have, at least impliedly, made a promise, not of performance but of an accessory nature.83 This goes further in a promissory analysis than any other jurisdiction appears to.

Despite the traditional conception of a stipulatio alteri in Scots law in promissory terms, it has been questioned by some whether this description is entirely apt. The author of the leading scholarly contract monograph, McBryde, has opined of the right of a third party that its nature is ‘uncertain’, and has suggested that it ‘may be better to treat jus quaesitum tertio as an independent right, which shares some of the characteristics of other contractual rights but also has special features’.84 Assessing the promissory view of the stipulatio alteri, McBryde believes that it is no longer necessary to rely on this view any more than it is necessary to see a contract as an exchange of promises.85 This rather presupposes that there is something undesirable or unhelpful in viewing either the stipulatio alteri or the contract in promissory terms which, it will be evident from this work, it is suggested there is not.

80There have been some successes however: see Melrose v. Davidson & Robertson 1993 SC 288, 1993 SLT 611 (CSIH), where the defenders won on the jus quaesitum tertio point, but lost the action on other grounds.

81As is demonstrated by the willingness of the court to consider a possible jus quaesitum tertio in the contract chain case Scott Lithgow Ltd v. GEC Electrical Projects Ltd 1989 SC 412, 1992 SLT 224 (CSOH).

82Smith, Studies Critical and Comparative, pp. 172, 177, 184, 185, 196, 197; Scottish Law Commission, Memorandum No. 38, pp. 12–15; MacQueen, ‘Jus Quaesitum Tertio’, para. 827.

83MacQueen, ibid., para. 827. Stair had remarked that either of the contracting parties could be compelled upon by the third party to exhibit the contract (I.x.5).

84McBryde, Contract, para. 10–07. 85 Ibid.