THIRD PARTY BENEFICIARY Meaning and
Definition
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A third party beneficiary refers to an individual or entity who is not a party to a contract, but nevertheless stands to benefit from the performance of the contract. In other words, it refers to someone who has a legally enforceable interest in a contract between two other parties.
For a person to be considered a third party beneficiary, the contract must explicitly identify them as a beneficiary, or the intent to confer a benefit upon them must be expressed in the contract language. The third party beneficiary may be an individual or an organization, such as a charitable organization. The contract may be created for the sole purpose of benefiting the third party, or it may include them as a beneficiary alongside the primary parties' intended performance.
A key characteristic of a third party beneficiary is that they have the right to enforce the terms of the contract in case of a breach by either or both of the primary parties. This means that the third party can bring a legal action against the parties involved to seek damages or specific performance. However, if the contract explicitly states that the parties intended to deny the third party beneficiary any enforcement rights, then the beneficiary may not have the ability to enforce the contract.
Overall, a third party beneficiary is a person or entity who benefits from a contract between two other parties and has the legal standing to enforce the contract if necessary.
