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.

  1. Implied Authority

    An agent with the jurisdiction to perform acts which are reasonably ...
  2. Bilateral Contract

    A bilateral contract is a reciprocal arrangement between two ...
  3. Breach Of Contract

    Violation of any of the agreed-upon terms and conditions of a ...
  4. Contract Holder

    An individual or organization who owns the rights to a debt or ...
  5. Obligation

    The legal responsibility to meet the terms of a contract. If ...
  6. Liquidity

    The degree to which an asset or security can be quickly bought ...
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