What is the test for determining whether a contract was made for the benefit of a third party?

MultiRegion, United States of America

The following excerpt is from Balsam v. Tucows Inc., 627 F.3d 1158 (9th Cir. 2010):

Because 3.7.7.3 does not create an independent binding obligation for the parties to the RAA, this provision cannot be reasonably construed to confer a right or benefit to any party, let alone a third party. See Roden v. AmerisourceBergen Corp., 186 Cal.App.4th 620, 113 Cal.Rptr.3d 20, 46 (2010) ("[Courts] must interpret a contract in a manner that is reasonable and does not lead to an absurd result."). "The test for determining whether a contract was made for the benefit of a third person is whether an intent to benefit a third person appears from the terms of the contract." Spinks, 90 Cal.Rptr.3d at 468. In the absence of any such intent, we conclude that 3.7.7.3 does not create any third party beneficiary rights that would control over the explicit "No Third-Party Beneficiaries" clause in the RAA.

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