Donee Beneficiary

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DEFINITION of 'Donee Beneficiary'

A person who is considered a non-party in a contract but still receives a benefit from the completion of the contract. A donee beneficiary could also be the third party that benefits from a donation or gift. For example, Sam (donor) promises to gift a gold watch to Phil (donee). To get this watch Sam will buy it from Mike (third party). In this case, Mike is the donee beneficiary in Sam and Phil's exchange. If Sam went back on his promise, Mike would not sell the watch. Mike benefits but is not actually part of the contract.

Also known as a third party beneficiary.

BREAKING DOWN 'Donee Beneficiary'

A donee beneficiary has no rights to their benefits if they do not know that a contract exists. But the donee beneficiary has a right to file for damages if he/she has vested. For example, if the donor beneficiary knows about the contract and acts on it (in the example above, Mike might build the gold watch), he/she can sue the purchaser if they cancel the contract.

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RELATED FAQS
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    It depends. Generally speaking, the designation of beneficiary form dictates who receives the assets from the individual ... Read Full Answer >>
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    A spouse who is the sole primary beneficiary of an IRA can always treat the IRA as his or her own. The contingent beneficiary ... Read Full Answer >>
  3. If an individual still has his or her former spouse as the beneficiary of an IRA, ...

    It depends. Generally, divorce does not effectively change a beneficiary designation unless the divorce decree makes a stipulation ... Read Full Answer >>
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    It depends on the provision of the IRA plan document. Some (though very few) do not allow the designation of successor beneficiaries. ... Read Full Answer >>
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