Third-Party Beneficiary

DEFINITION of 'Third-Party Beneficiary'

An individual who can sue parties in a contract despite not being a party listed in the original contract document. The third-party beneficiaries right to sue, called ius quaesitum tertio, comes from a party in the contract intending to involve the third-party, such as through the delivery of an item or some equivalent.

BREAKING DOWN 'Third-Party Beneficiary'

Parties able to sue for breach of contract must have been set to receive some benefit from the completion of the contract. For example, a child's parents pay a cemetery a down payment to cover the cost of a burial plot. If, upon death, the cemetery refuses to provide the child with the land, the child may sue the cemetery for non-performance even though he was not named in the original contract. The child was to benefit from the contract in that some of the burial costs were to be covered.

RELATED TERMS
  1. Covenant Not To Sue

    A legal agreement in which the party seeking damages agrees not ...
  2. Continuous Contract

    A reinsurance contract that does not have a fixed contract end ...
  3. Third-Party Transaction

    A third-party transaction is a business deal involving a buyer, ...
  4. Equitable Subrogation

    A legal doctrine that allows a party that has made payments on ...
  5. Contract Month

    The month in which a futures contract expires. The contract can ...
  6. Bilateral Contract

    A bilateral contract is a reciprocal arrangement between two ...
Related Articles
  1. Trading

    The Difference Between Forwards and Futures

    Both forward and futures contracts allow investors to buy or sell an asset at a specific time and price.
  2. Investing

    What is a Forward Contract?

    A forward contract is a customized contract between two parties to buy or sell an asset at a specified price on a future date.
  3. Managing Wealth

    Advanced Estate Planning: Child Care Documents

    By Steven Merkel Are you confident that your child care provider or babysitter would be capable of making informed decisions for your child in a medical emergency? Most parents want the best ...
  4. Trading

    Why Forward Contracts Are The Foundation Of All Derivatives

    This article expands on the complex structure of derivatives by explaining how an investor can assess interest rate parity and implement covered interest arbitrage by using a currency forward ...
  5. Retirement

    A Look At IRA Separate Accounting Rules

    If you are a younger multiple beneficiary, make sure you understand the RMD regulations.
  6. Personal Finance

    Teaching Your Child To Be Financially Savvy

    If you start today, you can set your kids up for a lifetime of smart money management.
  7. Trading

    Beginner's Guide To E-Mini Futures Contracts: E-Mini Specifications

    Each e-mini contract has certain specifications as outlined by its host exchange. Ticker SymbolEach contract has a ticker symbol, or an arrangement of letters representing the specific contract. ...
  8. ETFs & Mutual Funds

    Introduction To Currency Futures

    The forex market is not the only way for investors and traders to participate in foreign exchange.
  9. Trading

    Stock Futures vs Stock Options

    A full analysis of when is it better to trade stock futures vs when is it better to trade options on a particular stock. A quick overview of how each of them works and why would a trader, investor, ...
  10. Markets

    Investing in Crude Oil Futures: The Risks and Rewards

    Learn about the risks and rewards of trading oil futures contracts. Read about a few strategies to limit the risk in trading oil futures contracts.
RELATED FAQS
  1. Can your life insurance company sue you?

    Find out when life insurance companies have the right to recover claims. Learn about the most common reasons why a life insurance ... Read Answer >>
  2. What are the advantages of hiring a third-party marketing company?

    Explore the advantages of using a third-party marketing service to drive a marketing campaign. Like with most marketing strategies, ... Read Answer >>
  3. What is a forward contract against an export?

    Understand forward exchange contracts in exporting, and learn the purpose of using a forward contract and its advantages ... Read Answer >>
  4. How do the investment risks differ between options and futures?

    Learn what differences exist between futures and options contracts and how each can be used to hedge against investment risk ... Read Answer >>
  5. How are forward contracts regulated in the United States?

    Read about the risks of forward contracts and why they are not readily subject to regulation, including what happens when ... Read Answer >>
  6. How are futures used to hedge a position?

    Futures contracts are one of the most common derivatives used to hedge risk. A futures contract is as an arrangement between ... Read Answer >>
Hot Definitions
  1. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center