Third-party beneficiary

A third-party beneficiary, in the <a href="/facts/Law/luzxWkg0">civil law</a> of <a href="/facts/Contract/SkqyGj6S">contracts</a>, is a person who may have the right to sue on a contract, despite not having originally been an active <a href="/facts/Party_(law)/eyCHQMPR">party</a> to the contract. This right, known as a ius quaesitum tertio, arises when the third party (<a href="/facts/Tertius_(law)/BfKd19gd">tertius</a> or alteri) is the intended beneficiary of the contract, as opposed to a mere incidental beneficiary (penitus extraneus). It <a href="/facts/Vesting/rpSJpgrE">vests</a> when the third party relies on or assents to the relationship, and gives the third party the right to sue either the promisor (promittens, or performing party) or the promisee (stipulans, or anchor party) of the contract, depending on the circumstances under which the relationship was created.
A contract made in favor of a third party is known as a "third-party beneficiary contract."
Under traditional <a href="/facts/Common_law/vGVcW4Kf">common law</a>, the ius quaesitum tertio principle was not recognized, instead relying on the doctrine of <a href="/facts/Privity_of_contract/24VP4anh">privity of contract</a>, which restricts rights, obligations, and liabilities arising from a contract to the contracting parties (said to be privy to the contract). However, the <a href="/facts/Contracts_(Rights_of_Third_Parties)_Act_1999/Wf84x9YV">Contracts (Rights of Third Parties) Act 1999</a> introduced a number of allowances and exceptions for ius quaesitum tertio in <a href="/facts/English_law/FqYSDmGK">English law</a>. Other <a href="/facts/Common_law/vGVcW4Kf">common-law</a> countries are also making reforms in this area, though the <a href="/facts/United_States_of_America/P0sCdLe5">United States</a> is unique in abandoning privity early in the mid-19th century.

Third-party beneficiary open-in-new

Third-party beneficiary