Business Law 11th Edition by Kenneth Clarkson,Roger LeRoy Miller,Gaylord Jentz,Frank Cross

تمرين 6

Revels v. Miss America Organization
Court of Appeals of North Carolina, 2007. __ N.C. __, 641 S.E.2d 721.
www.aoc.state.nc.us/www/public/html/opinions.htm a
• Company Profile In 1921, businesses in Atlantic City, New Jersey, sponsored a "Miss America" contest as a publicity stunt to extend the summer tourist season. The stunt soon evolved into an event with contestants from each state vying every September for the title of Miss America. More than 12,000 women participate each year in the local and state events that culminate in the selection of the 52 national finalists. To succeed requires commitment, hard work, and talent. In 1945, the nonprofit Miss America Organization (MAO) offered its first scholarship. Today, MAO is the largest provider of scholarships to young women in the world, awarding more than $45 million in cash and tuition assistance annually.
a. In the "Court of Appeals Opinions" section, click on "2007." In the result, scroll to the "20 March 2007" section and click on the name of the case to access the opinion. The North Carolina Administrative Office of the Courts maintains this Web site.
• Background and Facts Miss North Carolina Pageant Organization, Inc. (MNCPO), is a franchisee of Miss America Organization (MAO). Under the "Miss America Organization Official Franchise Agreement," MNCPO conducts a public contest (the "State Finals") to select Miss North Carolina and to prepare Miss North Carolina for participation in the Miss America pageant (the "National Finals"). b In return, MAO "accept[s] the winner of the State Finals... as a contestant in the National Finals." On June 22, 2002, MNCPO designated Rebekah Revels "Miss North Carolina 2002." On July 19, MAO received an anonymous e-mail (which was later determined to have been sent by Revels's ex-boyfriend), implying that she had formerly cohabited with a "male non-relative" and that nude photos of her existed. Revels confirmed the existence of the photos. On July 22, MAO and MNCPO asked Revels to resign as Miss North Carolina and told her that if she refused, she would be excluded from competing in the National Finals. On July 23, she resigned. She then filed a suit in a North Carolina state court against MAO, MNCPO, and others, asserting, among other things, breach of contract. The court issued a summary judgment in MAO's favor. Revels appealed this judgment to a state intermediate appellate court.
b. A franchise is an arrangement by which the owner of a trademark, or other intellectual property, licenses the use of the mark to another party under specific conditions.
McCULLOUGH, Judge.
* * * *
Plaintiff contends on appeal that there was sufficient evidence that she is a thirdparty beneficiary under the franchise agreement between MAO and MNCPO to establish that there is a genuine issue of material fact [and thus for her claim to proceed to trial].
In order to assert rights as a third-party beneficiary under the franchise agreement, plaintiff must show she was an intended beneficiary of the contract. This Court has held that in order to establish a claim as a third-party beneficiary, plaintiff must show: (1) that a contract exists between two persons or entities; (2) that the contract is valid and enforceable; and (3) that the contract was executed for the direct, and not incidental, benefit of the third party. A person is a direct beneficiary of the contract if the contracting parties intended to confer a legally enforceable benefit on that person. It is not enough that the contract, in fact, benefits the third party, if, when the contract was made, the contracting parties did not intend it to benefit the third party directly. In determining the intent of the contracting parties, the court should consider the circumstances surrounding the transaction as well as the actual language of the contract. When a third person seeks enforcement of a contract made between other parties, the contract must be construed strictly against the party seeking enforcement. [Emphasis added.]
There was insufficient evidence before the trial court to support a conclusion that plaintiff was an intended beneficiary under the franchise agreement. Plaintiff was not designated as a beneficiary under the franchise agreement and there is absolutely no evidence that the franchise agreement was executed for her direct benefit. The franchise agreement does provide that MAO will accept the winner of the North Carolina pageant as a contestant in the national finals. However, this evidence is insufficient to establish a showing of intent on the parties to make plaintiff an intended beneficiary. Further, the evidence adduced tended to show that the primary intent of the franchise agreement was to ensure uniformity among all franchisees and it provided the incidental benefit of allowing the winner of MNCPO's contest to compete in the national finals.
• Decision and Remedy The court affirmed the lower court's judgment in favor of MAO. Revels was an incidental beneficiary of the agreement between MAO and MNCPO. That the agreement provided that MAO would accept the winner of the State Finals as a contestant in the National Finals did not establish that the two organizations intended to make the winner a direct beneficiary of the agreement. Revels was thus an incidental beneficiary and could not maintain an action against MAO based on the agreement.
• The Global Dimension If the agreement between MAO and MNCPO had involved a third party-an international pageant organization-would this have been a basis for concluding that Revels was a third party intended beneficiary Why or why not
• The E-Commerce Dimension How might Revels's third party status with respect to the agreement between MAO and MNCPO have been affected if the contracting parties had conducted their business online Explain.