“Privity of Contract” is a principle of contract law where only the parties who have signed the contract can bring claims on it. An exception to this rule is where the contract involves a third party beneficiary.
A third party beneficiary is a person who is benefited by the contract even though he or she has not signed it and is not a party to it. The third party is not in “privity of contract” with the other parties.
Determining whether or not the third party beneficiary can sue depends on whether the party is an intended or an incidental beneficiary:
No, the intent to benefit does not necessarily have to be in writing in the contract. The intent to benefit the third party can be implied based on the language and nature of the contract. The intent does have to be clear, however.
Contracts are a complicated area of law. An attorney experienced in contract law can help you determine if someone is a third party beneficiary, and if so, whether that person is intended or incidental.
Last Modified: 09-12-2011 02:39 PM PDTLaw Library Disclaimer
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