Third-Party Beneficiaries

Question 1

What are the types of Third-Party Beneficiaries?

Answer 1

1. Intended: An intended third-party to a contract
2. Incidental: A third-party to a contract that was not intended
3. Creditor
4. Donee

Question 2

When do the rights of an Intended Beneficiary vest?

Answer 2

1. Materially changes position in justifiable reliance
2. Manifests assent to the contract (or)
3. Files a lawsuit

Question 3

Who can an Intended Beneficiary sue?

Answer 3

Generally, only the promisor. BUT, if it’s foreseeable that the Intended Beneficiary would rely on the contract, the promisee can also be sued.