Donee Beneficiary

In one sentence

A third party who receives the benefit of a contract as a gift.

Plain English

A donee beneficiary is someone who wasn't part of a contract but benefits from it because one of the parties intended to give them a gift. For example, if you buy life insurance and name your child as the beneficiary, your child is a donee beneficiary. The key difference from other beneficiaries is that the donee receives the benefit as a gift, not to pay off a debt.

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Example

A grandmother contracts with a college to pay her grandson's tuition as a gift. The grandson is a donee beneficiary because the grandmother intended the payment as a gift to him, even though he didn't sign the contract.

Used in a sentence

“The insurance policy named the employee's spouse as a donee beneficiary, entitled to receive the death benefit as an intended gift.”

Related terms

Intended Beneficiary

A person who is not a party to a contract but has the right to enforce it because the parties meant to benefit them.

Creditor Beneficiary

A third party who benefits from a contract because it pays off their debt.

Incidental Beneficiary

A third party who benefits from a contract by accident, not by the parties' intent.

Mutual Consent

Both parties freely agree to the same terms of a contract without pressure or misunderstanding.

Executed Contract

A contract where both parties have fully performed all their obligations.

Good Faith

An obligation to act honestly and fairly in performing or enforcing a contract.

Offer

A proposal to enter into a binding agreement on specific terms.

Acceptance

Agreeing to the exact terms of an offer, creating a binding contract.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.