OPERATION AND INTERPRETATION OF CONTRACTS 1. Rights and liabilities of third parties.—A con tract is an agreement conferring rights and imposing liabilities upon the parties to it. It is their consent which has made the contract. A creditor can demand performance of the obligation from the debtor or his representatives. He cannot, as a rule, demand performance from a third person, nor can the debtor require him to do so. Yet the debtor or his representatives may perform the duty by an agent. Of course where an agent makes a contract for his principal and acts within the scope of his agency, the person with whom he contracts and to whom the fact of the agency has not been disclosed may, as a general rule, look to the agent or the principal for pay ment or performance. On the other hand, if the agent gave a promissory note or a check in payment, he would not be bound. The principal may not only he held liable on the contract made by his agent, but he may claim the benefits arising from it. In Eng land it is well understood that a third person who ma liciously interferes in the performance of a contract, as between the rightful parties to it, may render him self liable in damages: for example, if a third person maliciously induces an employe to break his engage ment with him employer, he may be liable in damages to the employer, and under the English cases this doctrine has been made applicable to contracts in general.
2. Contracts made for the benefit of a third person. —In England it is well established that a third person cannot sue on a contract made for his benefit by oth ers, eve.n if the contracting parties have agreed that he may.' In most of the American states the third party, in whose favor a direct benefit has been con tracted for by others, may recover. In New York, however, the promise must be for the benefit of the third party, and there must also be such a relation be tween him and the promise that the promisor's obliga tion constitutes a satisfaction of some duty of the promisee to the third In an English case, which is an exception to the English rule, it was held that a provision in a partnership contract to the effect that a partner's widow should be entitled to his share of the business, might be enforced by the widow. But the court in rendering judgment pointed out that this provision in the contract created a trust for the partnership prop erty in the hands of the surviving partner, and that if the widow acquired any right, as indeed she did, she acquired it because a trust had been created in her favor.
So it has been held in England that an agreement between A and B, that B shall pay a sum of money to C (an agreement to which C is not a party, either directly or indirectly), will not prevent A and B from coming to an agreement to the contrary the next day. If the third person is to have any right, he must be a party to the contract.
In Quebec the law is stated as follows : a person can not, by a contract in his own name, bind anyone but himself, his heirs and legal representatives ; but he may contract in his own name that another shall perform an obligation, and in this case he is liable in damages if such obligation be not performed by the person indicated. In like manner a party may stipu
late for the benefit of a third person, when such is the condition of a contract, as the making of a gift to another; he who makes the stipulation cannot revoke it if the third person has signified his assent to it. Under the English law, while a stipulation may be made in favor of a third person, the latter cannot en force it. Under the law of Quebec, however, it has been held that a third person, in whose favor a stipula tion has been made, and who has :signified his accept ance of it, may take action to enforce performance, altho he was not a party to the contract.' In another case, heard in the Court of Appeals of Quebec, it was decided that a third party need not in tervene in case a gift is made by one person to an other, with stipulations in favor of the third party, and that mere acceptance by the person to whom the gift is made, confers on the third person the right to exact performance of the charge or benefit stipulated in his It may be laid down as a general rule, however, that creditors may exercise the rights and actions of their debtor when, to their prejudice, he refuses or neglects to do so. Thus if a debtor refuses to recover from third persons, goods belonging to him which are in theiivpossession, creditors may take action to re cover them, in order that their rights may be pro tected and creditors may attack fraudulent contracts made by the debtor, as, for example, a transfer of personal property which hinders and delays them. Such an action will fail if the goods which are meant to be recovered in this way, are not really liable to answer the claims of the creditors. Thus, it was held that when a debtor gave certain creditors an agree ment for an absolute sale of his property, as security, with the necessary result of surrendering and delay ing his other creditors under circumstances which would support the preference, the judgment credi tors were held to be entitled to such order and direc tions from the court as would enable them to reach all the property of the debtor that remained in the preferred creditors' hands after the preferred claims were 3. Rules of the parties to a con tract put into writing what they have agreed upon, this document is the best evidence of what they in tended. The purpose in reducing the agreement to writing, and the actual effect of doing so, are to put into definite and permanent form what the parties in tend, and to render impossible later disputes as to the terms of the agreement. Having put their agree ment into writing, the parties must be held to have in tended that it shall fully express their intention and to have excluded the possibility of altering it by any oral evidence. It may be stated, therefore, as a gen eral rule, that oral evidence will not be admitted to contradict the terms of a valid written instrument. If A and B make a contract in writing, neither can show by oral evidence that he means something dif ferent from what is stated in the contract itself.