Which statement about third-party beneficiaries is correct?

Which statement about third-party beneficiaries is correct?

• A. They always have rights
• B. They never have rights
• C. They may have rights if the contract contemplates them
• D. They can enforce the contract only if they sign it

Answer: (C)

In contract law, a person who isn’t a party to the contract can still have enforceable rights if the contract is made for their benefit. This happens when the promisee and promisor intend to benefit that third party—an intended beneficiary. If the contract contemplates them, the third party may enforce the contract and sue for breach, even though they didn’t sign or participate in forming the agreement. If the contract does not intend to benefit them (an incidental beneficiary), they have no rights to enforce. So the best statement is that they may have rights if the contract contemplates them, because rights arise only when the contract is intended to benefit that third party. The other claims are too absolute or incorrect: not all third-party beneficiaries have rights, they don’t always have rights, and a third party’s enforceability doesn’t require their signature.

In contract law, a person who isn’t a party to the contract can still have enforceable rights if the contract is made for their benefit. This happens when the promisee and promisor intend to benefit that third party—an intended beneficiary. If the contract contemplates them, the third party may enforce the contract and sue for breach, even though they didn’t sign or participate in forming the agreement. If the contract does not intend to benefit them (an incidental beneficiary), they have no rights to enforce.

So the best statement is that they may have rights if the contract contemplates them, because rights arise only when the contract is intended to benefit that third party. The other claims are too absolute or incorrect: not all third-party beneficiaries have rights, they don’t always have rights, and a third party’s enforceability doesn’t require their signature.