Contracts & ExecutionQuestion 873 of 1632

A third-party beneficiary who is an 'intended beneficiary' of a contract:

a.Must first become a licensed contractor
b.May generally enforce the contract even though they were not a signing party
c.Automatically becomes liable for the contract price
d.Can never have any rights under the contract

Explanation

An intended third-party beneficiary, someone the contracting parties intended to benefit directly, may generally enforce the contract even though they did not sign it, once their rights have vested. This differs from an incidental beneficiary, who benefits only indirectly and cannot sue. The beneficiary need not be a licensed contractor and does not automatically assume liability for the price; being an intended beneficiary confers enforcement rights, not payment obligations.

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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)
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