United States v. Wood (1989)
United States Court of Appeals, Sixth Circuit
877 F.2d 453 (1989)
Mr. and Mrs. Wood, contemplating divorce, entered a property settlement in which Mr. Wood would convey his entire interest in their shared property to Mrs. Wood if she agreed to sell it and use the proceeds to pay Mr. Wood's outstanding federal tax debts; Mr. Wood then notified a government representative of this settlement. The couple later added an addendum in which Mr. Wood gave up any future interest or redemption right if the property sold for much less than fair value. Mr. Wood conveyed his interest, Mrs. Wood sold the property, but then refused to use the proceeds to pay his federal taxes, prompting the United States to sue her directly as an intended third-party beneficiary of the settlement agreement.
Whether an enforceable agreement for the purpose of benefiting a third party exists when there is consideration for the agreement flowing to the promisor and intent of the promisee to make a promise that directly benefits the third party.