Third-Party Beneficiaries Flashcards
What is a third-party beneficiary?
Party that is not party to a contract, but to whom one of the parties promises a benefit
What is an intended beneficiary?
One whom the contracting parties intended to benefit, and will often be named in the contract
What is a creditor beneficiary?
Promisee seeks a performance from promisor to satisfy an obligation owed to a third party (creditor beneficiary)
What is a donee beneficiary?
Promisee seeks performance from promisor in order to make a gift of that performance to a third party (the donee beneficiary)
Do intended beneficiaries have standing to sue the promisor?
Yes, intended beneficiaries can sue the promisors who directly promised to provide the benefit
Do intended beneficiaries have standing to sue the promisee?
No, they cannot sue the promisee based on the contract, though they can still sue on any prior obligations owed (n the case of creditor beneficiaries).
What types of third-party beneficiaries are intended beneficiaries?
- creditor beneficiaries
- donee beneficiaries
What are incidental beneficiaries?
Third party who will benefit from promisor’s performance as a practical matter, but who are not intended beneficiaries
Do incidental beneficiaries have standing to sue?
No, incidental beneficiaries can’t sue anyone to enforce contract.
Can a third-party’s rights under a contract be modified without the third-party’s consent?
Yes, until the third-party’s rights have vested.
When does vesting occur for third-party intended beneficiary rights?
With intended beneficiaries, vesting occurs when:
1. beneficiary brings suit on the matter
2. beneficiary changes position in justifiable reliance on the contract
3. beneficiary manifests assent to the contract at the request of promisor or promisee
4. rights of beneficiary has vested under the express contract terms
