Intended vs Incidental Third-Party Beneficiary: Who Can Enforce the Contract?
A person can benefit from a contract without gaining the right to sue on it.
Intended beneficiary
An intended beneficiary is someone the contracting parties meant to benefit in a legally recognized way and can acquire enforcement rights when those rights vest.
Incidental beneficiary
An incidental beneficiary receives a benefit from the contract but was not the intended legal beneficiary and generally has no right to enforce the agreement.
Vesting
An intended beneficiary's rights can vest based on events recognized under contract law, such as assent, reliance, or suit, depending on the governing rule.
Exam strategy
Ask whether the parties were trying to confer an enforceable benefit on the third party or whether the benefit is merely a side effect of their bargain.
The takeaway
Intended beneficiaries can acquire contract-enforcement rights; incidental beneficiaries generally cannot.
Related Summit resources
FAQ
Can an incidental beneficiary usually sue to enforce the contract?
No.
Can an intended beneficiary acquire enforcement rights?
Yes.
What is the key distinction?
Whether the contracting parties intended to confer a legally enforceable benefit.