Contracts
Third-Party Beneficiary
Definition
A third-party beneficiary is a person who is not a party to a contract but has enforceable rights under it because the contracting parties intended to benefit them. An intended beneficiary — either a creditor or donee beneficiary — may sue to enforce the promise. An incidental beneficiary, by contrast, has no enforcement rights. The beneficiary's rights vest once they learn of the contract and rely on it, or assent to it, after which the original parties generally cannot modify the contract to the beneficiary's detriment.
Example
Parent contracts with a builder to construct a house and specifies the deed will go to Child. Child is an intended donee beneficiary who may enforce the contract.