This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The great difficulty in the development of contract consists in the inability of law in its early stages to conceive of a binding promise unless it is made in some set and rigid form, or unless it is accompanied by the delivery of a thing in return for which the promise is made.1 As the idea of a binding promise of any other type begins to develop, it is likely to follow the analogy of the formal contract, and it is generally thought of as an obligation by one of the parties thereto in favor of the other.2 There is, accordingly, a strong tendency to assume that a contract between A and B can not confer any rights upon C, who is a stranger to the contract, although B stipulates expressly for a promise by A to do some act for the benefit of C.
The Roman law began with the assumption that the beneficiary had no rights of any sort under such a contract. The question was not one of procedure. It did not involve the question whether the promisee or the beneficiary should bring an action upon the contract. It was assumed that only the immediate parties to the contract could acquire any rights thereunder. As primitive and rigid concepts were succeeded by broad and philosophical theories, the fact that the original party had intended the contract to be for the benefit of a third person and that no effect could be given to the actual intention of the original party to the contract unless the third person was treated as the real promisee, led ultimately to the theory that the beneficiary could enforce the promise against the original obligor in accordance with its terms and in accordance with the true intent of the parties.3
As will be seen from the following discussion, the different jurisdictions in which Anglo-American law is in force have differed widely upon the fundamental question of the existence of the right of the beneficiary to enforce such a promise. The peculiar development of the law in England, based as it was largely upon the history of the different forms of action, induced the English courts to abandon their earlier theory that the beneficiary had rights under such a contract and to adopt the reactionary view that whatever rights the promisee might have, the beneficiary had none.4 In the United States some of the courts still adhere in outward form of words, at least, to the modern English view.5 In other jurisdictions the courts have reverted to the earlier English view and they have recognized the existence of rights in the beneficiary; but the scope and content of the rights of the beneficiary and their connection with the rights of the promisee, involving the question of whether the promisee has any rights at all under such contract, are questions which have caused the courts a great deal of trouble.
1 See ch. 1.
2 See Sec. 25 et seq.
3 See on this question, Contracts for the Benefit of a Third Person in the Civil Law, by Samuel Williston. 16 Harvard Law Review 43.