Bain v Gillispie
Ct of App IA  [1984]
Author:- Sam Biers

Expanding Use of 3^rd Party Beneficiaries Concepts

Relevant Facts: Pl Bain is a referee for college basketball games.  During a game he made a call that resulted in the opposition winning by a free throw.  Some fans blamed Pl for the loss.   Dfs operated a novelty store for profit not associated with the University.  A few days after the game, Dfs began marketing a shirt referencing PL by a figure w/ a rope around his neck and the words Jim Bain Fan Club.

Legal Issue(s): Whether the store owners were direct beneficiaries of contract between athletic conference and referee and were not able to maintain a cause of action?

Court’s Holding: No

Procedure: D. Ct sustained motion for summary judgment dismissing store owners' counterclaim. Store owners appealed. The Court of Appeals Affirmed.

Law or Rule(s): To maintain an action for breach of K as a third party beneficiary, the party would have to be either privity to the K, or a direct beneficiary, not merely incidental.

Court Rationale: It is beyond credulity that Bain, while refereeing a game, must make his call at all times perceiving that a wrong call will injure Df’s business or other similarly situated.  Referees are in the business of applying rules, not in the work of creating a marketplace for others.  The Dfs were not privity to any K, they were not direct beneficiaries.   By deposition the Dfs answered that there was no K between them and Pl. Pl stated that he had no written K with the Big 10. For the purposes of any promise which Pl might have made was not to confer a gift upon the Dfs.  The Big Ten did not owe a duty to the Dfs such that they would be considered creditor beneficiaries. The real test is said to be whether the contracting parties intended that a third party should receive a benefit which might be enforced in the courts. There are no genuine issue for trial which could result in Dfs obtaining a judgment under a K theory of recovery.

Plaintiff’s Argument: There is no K, the Dfs are not direct beneficiaries if there were a K.

Defendant’s Argument: Until a K is produced, there exists a question of whether the Dfs are beneficiaries. The Pl’s calls amounted to malpractice which caused a harm to Df’s business.