Legal Definitions - stipulation pour autrui

Stipulation pour autrui refers to a specific clause within a contract where two parties agree to provide a benefit to a third party who is not directly involved in the original agreement. The unique aspect of a stipulation pour autrui is that it grants this third party a direct legal right to demand the promised benefit from the party who made the promise, even though the third party did not sign the contract. This means the third party can legally enforce the provision.

Here are some examples to illustrate this concept:

• Life Insurance Policy:

  Imagine a parent purchases a life insurance policy from an insurance company, naming their adult child as the sole beneficiary. The contract is between the parent and the insurance company. The provision within this policy that promises a payout to the child upon the parent's death is a stipulation pour autrui. Even though the child was not a party to the insurance agreement, this clause gives them a direct legal right to claim the insurance proceeds from the company when the time comes.

• Real Estate Development Agreement:

  Consider a property developer who sells a new home to a buyer. The sales contract includes a specific clause stating that the developer will construct a shared community park and maintain it for the benefit of all residents in the new housing development. The contract is between the developer and the initial homebuyer. The clause about the community park is a stipulation pour autrui because it creates a benefit for all future residents (third parties) of the development. If the developer fails to build or maintain the park as promised, any resident, even those who bought their homes later from other sellers, could potentially sue the developer directly to enforce this promise.

• Corporate Service Contract:

  A large corporation hires a cleaning service to maintain its office building. The contract between the corporation and the cleaning service explicitly states that the cleaning service must use only eco-friendly, hypoallergenic cleaning products to ensure a safe environment for all employees. The contract is between the corporation and the cleaning service. The provision regarding the use of specific cleaning products for employee safety is a stipulation pour autrui. While the employees are not parties to the contract, this clause grants them a direct right to expect and potentially enforce the use of these specific products by the cleaning service, especially if an employee suffers an allergic reaction due to non-compliant products.