A necessary party in a lawsuit is someone who must be included for the court to issue a judgment. Factors include direct harm, rights in dispute, and full relief for the plaintiff. An example is a third-party beneficiary in a contract dispute.
A necessary party in a lawsuit is a person or entity that must be included in the action for the court to issue a judgment. There are generally three factors that can make a person or entity a necessary party. The first is the question of whether the missing party could be directly harmed by the outcome of the case. Second, it is whether the missing party has rights in the subject of the dispute that creates an obligation for one or more of the other parties to the dispute. The last is the question of whether the court can provide full relief to the plaintiff in case the court finds in his favor without the missing part.
The first factor that could cause someone to be considered a necessary party to a suit is whether that person or entity has an interest that could be directly harmed in the litigation. Take, for example, a contract between two people in which person A grants person B a house for the duration of his life. If the contract stipulates that the home goes to Person C upon Person B’s death, Person C becomes what is termed a third-party beneficiary. If someone sues Person B claiming to be the real owner of the house and the agreement between Person A and Person B is void, Person C is a necessary party since his interest in the house will be harmed if the court decides to cancel the deal.
The second factor that could cause a person to be a necessary party is whether one of the parties to the dispute has an obligation to that third party because of the subject matter of the dispute. Continuing the previous example, it is clear that Person C is also a necessary part of this standard. Person B is obligated to give possession of the house to person C upon her death.
The third and final factor that typically decides whether or not a person is a needed part is whether or not the plaintiff can get full compensation without the missing part being present. The example above where another person sues person A and person B still implies that person C is a necessary party to this standard. Person C has a vested interest in the house as a third party beneficiary of the contract. Therefore, Person C’s interest must be destroyed if the claimant is to be awarded the compensation he seeks and Person C is a necessary party.
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