Schauer v. Mandarin Gems of California, Inc

In Schauer v. Mandarin Gems of California, Inc. (2005) 125 Cal.App.4th 949, the court found that the recipient of an engagement ring (later found to be less valuable than represented at the time of sale) could have third party beneficiary standing in her own right to sue the jeweler for breach of contract, even though the jeweler's contract had been made with her former fiance; it was important that her former fiance had contracted to purchase the subject engagement ring "for the sole and stated purpose of giving it to plaintiff." (Schauer, supra, 125 Cal.App.4th 949, 958.) "Under the alleged facts, the jeweler must have understood former fiance's intent to enter the sales contract for plaintiff's benefit. Thus, plaintiff has adequately pleaded her status as a third party beneficiary, and she is entitled to proceed with her contract claim against defendant jeweler." (Ibid.) Those circumstances showed an express intent was made known to the jeweler to benefit only the plaintiff, since the engagement ring was purchased for that purpose only, and when the ring turned out to be defective, she could recover damages on a third party basis. The opinion does not find it necessary to explain whether donee or creditor beneficiary status existed. (Id. at pp. 957-958.)