People have a tendency to think that someone is a necessary party under R. 19 when he actually isn't. Be careful. There are basically three ways that someone can be a necessary party:

1) in the absence of the party complete relief cannot be provided to existing parties

OR

the absent party claims an interest relating to the subject of the action and a disposition of the action without that person may

2) as a practical matter impair his ability to protect that interest

OR

3) leave the persons already parties subject to a substantial risk of incurring double, multiple or otherwise inconsistent obligations.

The first case is rare. But an example is the following. You sue someone for injunctive relief, but providing relief requires the joint participation of the defendant and another person. That other person would be a necessary party.

Concerning the second case, it is very important to realize that non-parties cannot be bound by claim or issue preclusion. As a result, a suit to which you are not a party cannot bind you even if the suit concerns events that you participated in. For example, let's say that A beat up both B and C in the very same brawl. C sues A for battery. B is not a necessary party, because even if C loses, that loss will not adversely affect B at all. B can still litigate the very same facts all over again and collect if he wins.

So if the absent party can't be legally bound, when can a suit impair an absent parties' interests? One example is when there are multiple claims against limited fund (such as a trust fund or insurance proceeds). If the absent party isn't brought in, there might not be anything to get relief from if he sues later. (Notice that this would also be a case for the absent party to intervene of right - see R. 24.) It is the practical effect of the judgment on the absent party that is relevant.

Concerning the third case, it is very important to realize that your obligations are not inconsistent simply because two different people suing you separately concerning the same facts could get incompatible judgments. If B and C each sue A for a battery that A allegedly committed against both B and C at the same time, it is not inconsistent (as far as R. 19 is concerned) that B should lose because it is determined that A wasn't a participant in the brawl at all and C should win because it is determined that A was a participant, even if these judgments are logically incompatible. So what is a case of inconsistent obligations? Basically, when you are required in one suit to do something and in another suit to not do it. For example, one suit could decide that you should turn over a vase to A and another that you should turn it over to B. You simply can't do both. Analogously, if both A and B want damages for your withholding the vase (rather than the vase itself), you may be subject to double or multiple obligations. There's only one vase, but you have to pay out twice. (Notice that these would also be cases where interpleader would be appropriate.)

Finally, as a rule of thumb, if a contract is being litigated, all the parties to the contract are necessary parties. (Why do you think that's so?)

You should consider carefully when a party is merely necessary (which means that he should be joined if possible) and when he is indispensable (which means that if he can't be joined the case must be dismissed). See R. 19(b) for the criteria for indispensable parties.