Intended Beneficiary

In one sentence

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

Plain English

An intended beneficiary is someone outside the contract who can sue to enforce it because the contracting parties clearly intended to give that person the benefit of the agreement. This is different from a bystander who just happens to benefit from a contract between others. Common examples include life insurance beneficiaries or someone hired to perform work for a third party's benefit.

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Example

A grandmother buys a life insurance policy naming her grandchild as the beneficiary. When the grandmother dies, the grandchild can enforce the policy and collect the money, even though the grandchild never signed the contract with the insurance company.

Used in a sentence

“An intended beneficiary can enforce the contract even without being a party to it, as long as the original parties meant to benefit them.”

Related terms

Privity of Contract

The legal relationship between parties who directly made a contract, limiting who can sue on it.

Third-Party Right

A legal right or benefit that belongs to someone who is not a party to the original contract.

Consideration

Something of value exchanged by each party to make a contract binding.

Mutual Assent

Both parties agree to the same contract terms at the same time.

Acceptance by Silence

Accepting a contract by doing nothing when the other party expects a response.

Assignment of Rights

The transfer of a contractual right from one party to another, making the new party the beneficiary.

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.