Contracts & ExecutionQuestion 873 of 1605
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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Related questions on this topic
- 'Accord and satisfaction' discharges a disputed obligation when:
- The doctrine of 'impossibility' (or impracticability) may excuse performance when:
- 'Frustration of purpose' as an excuse for nonperformance applies when:
- An 'incidental beneficiary' of a contract differs from an intended beneficiary in that an incidental beneficiary:
- A contractor's bid submitted to an owner is best characterized in contract terms as:
- 'Promissory estoppel' may allow enforcement of a promise, even without traditional consideration, when:
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Sen Lin, PrepPass Founder · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)