The party claiming third-party beneficiary status must show that the contract was entered into by the parties directly and primarily for his benefit. The benefit must be more than merely incidental to the agreement.
Appellant inmate claimed that the kosher food provided by the appellee contractor averaged fewer calories than the minimum required under the appellee State's contract and that the food did not meet the dictates of his religious beliefs. Appellant sought damages for breach of contract as a third-party beneficiary. The trial court denied appellant’s claim. The Supreme Court of South Dakota affirmed the trial court’s judgment.
Did appellant have standing to sue for breach of the State's contract with appellee, arguing that he is a third-party beneficiary of that contract?
The contract at issue was a public contract between appellee State and appellee contractor, and that the contract did not expressly indicate that it was intended for appellant inmate’s direct benefit or enforcement. On the contrary, the contract reflected that it was made for the express benefit of appellee State, and the collective benefit that inmates could receive was only incidental to that of appellee State. Accordingly, under S.D. Codified Laws § 53-2-6, appellant could not recover as a third-party beneficiary.