The Cretex Companies, Inc. v. Construction Leaders, Inc.
Supreme Court of Minnesota
342 N.W.2d 135 (1984)
Northland hired Construction Leaders, Inc. (Construction) (defendant) as general contractor for utilities work and separately obtained a performance bond from surety Travelers (defendant), under which Travelers would complete the work if Construction defaulted. Construction hired The Cretex Companies, Inc. (Cretex) (plaintiff) as a subcontractor, then defaulted on the Northland contract and failed to pay Cretex. Cretex sued both Construction and Travelers, arguing it was an intended third-party beneficiary of the Travelers-Northland surety agreement; the trial court agreed and ruled for Cretex, and Travelers appealed.
Whether a subcontractor may recover as an intended third-party beneficiary of a surety agreement between the general contractor's client and the surety, when the agreement's language and circumstances point to protecting the client rather than the subcontractor.