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Gourmet Lane, Inc. v. Keller

Court of Appeal of California

35 Cal. Rptr. 398 (1963)

Relevant factsFree

Food-concession tenants, including Keller (defendant), each had leases with a common landlord requiring them to form an association to maintain shared dining and food-preparation areas, with majority decisions on the common area binding all tenants; the tenants incorporated as Gourmet Lane (plaintiff), and a majority of its tenant-directors adopted a cost-allocation formula (a fixed weekly minimum plus a percentage of sales) that an accountant confirmed matched industry practice. Keller paid the minimum for a time, then stopped, and Gourmet Lane sued for his share; the trial court found Keller bound by contract as a third-party beneficiary arrangement, and Keller appealed.

IssueFree

Whether a contract that is made expressly for the benefit of a third party may be enforced by that third party at any time before the contract is rescinded.

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