MindTap: Worksheet 12.5: Third Party Rights

Match the term to the correct definition.

Incidental beneficiary: A person who is not a party to a contract, but who will benefit from the performance of a contract; this person has no right to sue if the contract is not performed.

Third party beneficiary: A person who is not a party to a contract but who will benefit by the performance of the contract.

Intended beneficiary: A person who is not a party to a contract but who the contracting parties meant to benefit from the contract and has rights to sue if the contract is not performed.

Because a donee beneficiary is merely receiving a gift, a donee beneficiary cannot win a lawsuit if the contract is not performed.

False

In determining whether a third party is an intended or incidental beneficiary, courts typically use the _____ test. Factors that indicate a party in an intended beneficiary may include whether performance is rendered _____ the third party, if the third party has the right to _____ of performance, and if the third party is _____ mentioned in the contract.

reasonable person; directly to; control details; expressly

Which of the following would NOT be an indicator of third party rights vesting in a contract?

When the incidental third party beneficiary becomes aware of the benefit to her.

Both intended and incidental third party beneficiaries may sue to enforce a contract, so long as their rights have vested.

False

A creditor beneficiary can sue to enforce a contract

because they are an intended beneficiary

Who is the promisor in a bilateral contract that benefits a third party?

The party that made the promise that does not benefit the third party.