TPB

Question 1

Define Third Party Beneficiary

Answer 1

Customer is not a party to the Plumber-Aqua World contract but stands to benefit from it which
is the theory behind third-party beneficiary doctrine which would allow the third party, who is not a party
to the contract between the promisor or promisee, to enforce the promise.

Question 2

How do you know whether the third party is an intended beneficiary?

Answer 2

Is the third-party beneficiary an intended beneficiary or incidental beneficiary? Incidental beneficiaries have no rights and no standing to sue to enforce the promise between promisor and promisee. The “intent to benefit” test looks at whether the PROMISEE intended to benefit the third party. If yes, then they are intended. If no, they are incidental.

Question 3

How do you know what type of beneficiary the third party is?

Answer 3

If the promisee intends to confer a gift on the third party, then donee beneficiary. If the promisee owes a legal obligation to the third party then creditor.

Question 4

When do a TPB’s rights vest and who can they sue if they have?

Answer 4

Donee rights vest when they know or assent to the gift. Creditor rights vest when they rely on the promise. A donee beneficiary can sue the promisor. A creditor beneficiary can sue the promisee, promisor, or both.

Question 5

What steps for a TPB fact pattern?

Answer 5

1. UCC or CL
2. Label the parties
3. Define TPB
4. Intended beneficiary?
5. Is the K enforceable?
6. Donee or creditor?
7. When do rights vest?