Caltex Plastics, Inc. v. Lockheed Martin Corp.

Even though a federal defense contract required use of boxes only plaintiff made, plaintiff was not a third party beneficiary of the contract because neither contracting party intended to grant plaintiff enforceable rights under the contract.  Because of the uniquely large federal interest in government contracts with defense manufacturers and because that interest conflicts with state law’s relatively lax third party beneficiary standard, the stricter federal law standard would be applied to determine whether a box supplier was a third party beneficiary of a defense contract which, the supplier claimed, required the defense contractor to use a type of box that only the supplier manufactured.  Under the tough federal standard, the supplier faced a comparatively difficult task of fighting a presumption that it was only an incidental beneficiary of the defense contract.  It failed at that task because it could not show that either contracting party intended to grant the supplier enforceable rights under their contract.

Ninth Circuit Court of Appeals (Smith, M., J.); June 8, 2016; 2016 WL 3192262

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