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Legal Memorandum: Enforcement of Unconscionable Contracts

Issue: Under the law of the Virgin Islands, is a third-party beneficiary barred from enforcing an unconscionable contract?

Area of Law: Business Organizations & Contracts
Keywords: Unconscionable Contract; Third-party beneficiary; Enforcement
Jurisdiction: Federal, Virgin Islands
Cited Cases: 115 So. 94
Cited Statutes: None
Date: 05/01/2004

A third-party beneficiary’s right to enforce an agreement cannot “rise higher than the rights of the contracting parties through whom he claims.”  Maryland Cas. Co. v. Dep’t of Gen. Servs., 489 So. 2d 54 (Fla. Dist. Ct. App. 1986).  In other words, third-party beneficiaries must take their contracts as they find them—the good with the bad.  The rights of a third-party beneficiary are thus affected by “all of the infirmities of the agreement as between the parties thereto.”  Meyerson v. New Idea Hosiery Co., 115 So. 94 (Ala. 1927); 13 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 37:23 (2000).  Thus, “to the same extent that third parties can take advantage of beneficial and favorable terms of the contract, they are also bound by any inadequacies of the contract.”  Williston, at 149-50.

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