Third Party Beneficiaries

Question 1

Intended Beneficiary

Answer 1

Expressly designated or identifiable at the time of performance; performance is to be made directly to them; they have rights under the contract; the relationship between the third party and the promisee suggests the promise wishes the beneficiary to be benefited.

Question 2

Types of Intended Beneficiaries

Answer 2

(1) Creditor: Where the promisee’s intent was to discharge an obligation.
(2) Donee beneficiary: where the promisee’s intent was to bestow a gift.

Question 3

When do Third Party Beneficiary Rights Vest

Answer 3

Rights vest when the beneficiary:

(1) Manifest assent in the manner requested by the parties;
(2) Brings suit to enforce the promise;
(3) Materially changes position in justifiable reliance on the promise.

Question 4

Third Party Beneficiary Remedies

Answer 4

If promisor fails to perform, TPB may always sue the promisor on the contract, and the promisor may raise any defense they could have raised against the promisee.

Donee TPBs cannot sue the promisor for failing to perform.