Third-Party Beneficiaries to a Contract

The video tutorial explains the concept of third-party beneficiaries in contracts. It begins by defining a third-party beneficiary and the general rule that contracts are enforceable only between the parties involved. Exceptions occur when a third-party beneficiary is intentionally included. The video distinguishes between donee beneficiaries, who receive benefits as a gift, and creditor beneficiaries, who receive benefits in exchange for a debt. It also clarifies that incidental beneficiaries, who are not intentionally included, have no rights to enforce the contract.

What is a third-party beneficiary in the context of a contract?

• A party that nullifies the contract

• A party that creates the contract

• A party that is not involved in the contract but benefits from it

• A party that enforces the contract

Which of the following best describes a donee beneficiary?

• A third party who creates the contract

• A third party who pays for the benefits

• A third party who is an incidental beneficiary

• A third party who receives benefits as a gift

If a donee beneficiary does not receive the promised benefit, who can they sue?

• The donor

• The obligor

• Both the donor and the obligor

• Neither the donor nor the obligor

What distinguishes a creditor beneficiary from a donee beneficiary?

• A creditor beneficiary is an incidental beneficiary

• A creditor beneficiary cannot enforce the contract

• A creditor beneficiary receives benefits in exchange for a debt

• A creditor beneficiary receives benefits as a gift

What rights does an incidental beneficiary have in a contract?

• Rights to modify the contract

• No rights to enforce the contract

• Limited rights to enforce the contract

• Full rights to enforce the contract