Third-Party Beneficiary

AAA

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.

INVESTOPEDIA EXPLAINS '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. 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. Occupational Safety And Health ...

    Law passed in 1970 to encourage safer workplace conditions in ...
Related Articles
  1. Retirement

    Designating A Trust As Retirement Beneficiary

    Designating a trust as your IRA beneficiary can be beneficial, but it requires proper planning to avoid problems.
  2. Retirement

    6 Ways To Lose Your Estate

    Find out why you shouldn't put off putting your affairs in order.
  3. Retirement

    Disclaiming Inherited Plan Assets

    There are some good reasons for choosing not to accept the funds, but be sure you follow the proper process.
  4. Options & Futures

    An Estate Planning Must: Update Your Beneficiaries

    Life changes make it time to rewrite your plan's designations.
  5. Retirement

    Mistakes In Designating A Retirement Beneficiary

    Make sure your beneficiary designations not only reflect your intentions but also meet the requirements to be effective.
  6. Investing

    What's a Debit Note?

    A debit note is a document used by a seller to inform a purchaser of a dollar amount owed. As the name indicates, it is a note from the seller that a debit has been made to the purchaser’s account. ...
  7. Professionals

    What does C-Suite Mean?

    C-Suite is a slang term used to describe the highest level senior executives of a corporation. This is the decision-making, power center of a company. These individuals are usually paid well, ...
  8. Investing

    What's a Monopolistic Market?

    A monopolistic market has a significant number of characteristics of a pure monopoly. Though there may be more than one supplier, the market has high prices, suppliers tightly control availability ...
  9. Professionals

    What's Human Capital?

    Human capital is a company asset, but it’s not listed on the balance sheet. Human capital is all of the creative skills and knowledge embodied in the employees of a company -- skills that bring ...
  10. Investing

    What's Capitalization?

    Capitalization has different meanings depending on the context.

You May Also Like

Hot Definitions
  1. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  2. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  3. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  4. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  5. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center