This article has been written by Anubha Tewari. This article broadly covers the rights and liabilities of third parties in a contract and the circumstances under which such rights and liabilities can be enforced through the performance of the contract, including its applicability, enforceability, exceptions, evolving perspective and criticism.

Introduction

We all know that contracts are a crucial part of our daily lives, which involve situations ranging from routinely paying bills to indulging in complex business dealings. They play an important role, particularly in facilitating transactions within our economic system. A contract is required to clearly outline the rights and duties of each party, which helps in providing clarity and predictability regarding the roles and responsibilities of each party involved. In addition, the contract helps in formalizing the relationship between the parties and further makes the promises of each party legally enforceable within the contract. 

The contract also helps in the identification of risks and the prevention of any dispute between the parties by outlining the expectations of each party and avoiding any kind of misunderstanding between them. Therefore, a contract helps in determining the right course of action to be taken in case of a breach of contract and ensuring compensation for damages of a general/specific kind caused to either party due to such a breach. 

The laws governing contracts in the United States are mostly based on the Common Law, which is acquired from the judicial precedents of the courts of England. These important principles are further explained in the treatise titled Restatement (Second) of Contracts, which was published by the American Law Institute. 

The Restatement (Second) of Contracts was further substituted by the Uniform Commercial Code, specifically in relation to the sale of goods. The Uniform Commercial Code is a body of law established in 1953 to govern the financial transactions and contracts operating within the states of the United States. It was established to overcome the difficulty faced by companies in transacting business affairs across the United States. These codes have been wholly implemented under the state laws of the United States and consist of nine articles that further involve distinct elements relating to banking and debts.

In the United States, contract laws are also regulated by the principles of private law, which involve the terms and conditions included in the agreement made between the parties involved. These private laws have the power to prevail over the rules and regulations established by state laws. Generally, the contract is based on the principle that the rights and liabilities of parties are primarily affected if they are directly involved in the contract. However, there are individuals who are not directly involved in the contract but possess the capacity to legally enforce such contracts. Such individuals are commonly known as the “third party” in a contract, which has the ability to enforce contracts under specific circumstances. 

In this article, we will look at the basic information, practices, and exceptions regarding the third-party rights and liabilities in a contract. Furthermore, we will also try to show and analyze how this rule has developed over the years, under what circumstances and in what ways the third party can enforce a contract, and also address the rights of third parties in breach of contract and other similar circumstances.

Who are third-parties to a contract

According to the general rule of contract law, only two parties are involved in the contract, which are known as the promisor and the promisee. The promisor makes an offer to the promisee for consideration, and when such an agreement becomes legally enforceable, it is known as a “Contract”. In such a contract, if any individual or entity is not a party to a contract, also known as “strangers to contract”, they do not possess the right to enforce the contract if they are not directly involved in the execution of such a legal agreement or contract. Such individuals or entities are commonly referred to as the third parties to a contract. 

This general rule of contract is commonly referred to as the “privity rule” in a contract, under which the individuals or an entity who are not parties to a contract have no rights and obligations to enforce the terms and conditions outlined in the contract. Earlier, this rule of privity in a contract was not applicable even under those circumstances where the contract was made for the benefit of third parties. The third parties involved in such a contract during that time did not have the right to enforce such a contract. 

The rule of privity in earlier times was categorized into two main aspects, which include: 

a) The third party in a contract cannot be subjected to the burden imposed by the contract, and 

(b) The third party has no right to enforce any benefit arising out of the contract. 

The first aspect of this rule was widely accepted, as it made no sense to involve a third party and let them bear the liability of such contracts in which they have no interest or relation to the contractual party. But the second aspect of this rule was extremely criticized, as the third party should be entitled to receive any benefit that is purported to arise out of the contract. This criticism led to a major transformation in the second aspect of the rule of privity, which further helped in recognizing the rights of a third-party in a contract where there is a clear intention to benefit the third-party or assign the contract rights, or delegate any duty of the contractual party in the contract. Therefore, the third-party rule in a contract is now well established and is broadly categorized into: 

a) third-party beneficiaries; 

b) assignment; and 

c) delegation. 

The third-party beneficiaries were further classified by the Restatement of Contract (First) under Section 133 into three categories, which include: 

a) donee beneficiary; 

b) creditor beneficiary; and 

c) incidental beneficiary

This provision provided enforcement rights to the donee and creditor beneficiary, but no enforcement rights were granted to the incidental beneficiary. Section 143 of the Restatement of Contract (First) provided that the donee beneficiary’s right is immediately vested upon the making of the contract, and no further modifications to the contract can be made without their consent. One of the instances where the donee beneficiary’s right is immediately vested was in a life insurance contract, which was detailed under Section 142 of the original Restatement of Contract. 

The Restatement of Contract (First) created confusion regarding the classification of third-party beneficiaries as many third-party beneficiaries were not covered under these two categories, and this provision was amended by Section 302 of the Restatement (Second) of Contracts, in which the donee and creditor beneficiaries were combined into a single category named as intended beneficiaries. The Restatement (Second) of Contracts attempted to provide a clear view regarding the classification of third-party beneficiaries by applying an “intent to benefit test” for such classification, in which the intention of the contracting parties shall be examined in order to evaluate any third-party claim. 

The Restatement (Second) of Contracts further in Section 313 included a contract in which one of the parties shall be the government, and any person who contracts with the government in order to render a service to the public on behalf of the government shall not be liable to the general public due to the performance of their obligations in such a contract. This provision amended Section 145 of the original Restatement of Contract. Many contracts with the government were created with the intent of providing services to the government itself and not to the general public, due to which the general rule of Section 302 of Restatement (Second) of Contract shall apply to those contracts instead of Section 313 of Restatement (Second) of Contract.  

A very common example of a transaction involving a third party is an online payment portal through which the buyer (“Party A”) makes a payment in regard to the goods and services received from the seller (“Party B”). Here, the third-party provider (“Party C”) is involved and plays a major role in executing the contract between Party A and B through receiving the payment from the buyer, debiting the money from the buyer’s account, and further transferring the payment to the seller’s account. Therefore, through such online payment portals, Party C acts as a third party in a contract between Party A and B, in which it is not directly involved in the contract but affects the contract between Party A and B. 

Third party beneficiaries

The term “third-party beneficiaries” has been derived from the definition of a third party considered in a contract. Any individual / entity acting as a third party in a contract can incur a right or liability through such contract under specific circumstances. When only the rights of such a third party are affected due to the terms and conditions outlined in a contract or the third party receives any benefit through such a contract, then such a third party is commonly referred to as a third-party beneficiary. Further, if the promisor in a contract did not perform their promise to benefit the third party, the promisee may sue them for a specific performance of such contract.

Rights of the third party 

The parties to a contract have the right to claim benefits in the contract that are caused by the non-performance of the contract. The third party can also sue and obtain remedies from the court in cases of breach of contract by the contractual party only at the time of or after the vesting of their rights in the contract. Such rights are vested either upon the formation of the contract by the parties where such rights are particularly conferred on the beneficiary through performance of the contract or transferred at a later stage due to circumstances surrounding the contract. Once the rights are vested in a third party, there can be no modifications to such a contract without the permission of such a third-party. The third party in a contract can claim the following remedies in the event of non-performance of obligations by contractual parties, which are as follows:

Right to claim damages

Damages in a contract are provided in circumstances of breach of contract where the party obligated to perform does not fulfill their promises as per the terms of the contract. The party aggrieved due to such non-performance can claim damages from the defaulting party if they suffer any financial loss. The third party can also claim such damages from the defaulting party if they are made parties to the contract by the contractual parties to confer on them any right or duty. The damages are provided to restore the original position of the aggrieved party. These damages are calculated based on the losses suffered by such a third-party due to non-performance of such a contract. The law governing the remedy of claiming damages by the aggrieved party in a contract is provided under various sections of Uniform Commercial Code. Section 2-710 of the UCC provides the seller’s right to incidental damages under a contract relating to the sale of goods. Section 2-718 of the UCC and Section 2-719 of the UCC briefly state the rules related to liquidated damages in sale of goods contracts. 

In the case of Martin v. Little, Brown and Co., (1981), the plaintiff wrote a letter to the defendant advising that portions of their book had been plagiarized by another book and also provided details regarding the plagiarized portions and name of the other book. The defendant sued the plagiarized party for copyright infringement. The plaintiff demanded money from the defendant for providing such information and argued that there is an implied contract between them, and he is entitled to enforce the contract as a third party. The defendant denied all the claims of the plaintiff and argued that there was no contract between them as such information was given voluntarily by the plaintiff and the defendant never asked for such information from the plaintiff.

In this case, the Superior Court of Pennsylvania observed that an implied-in-fact contract is an agreement where the intention of the contractual parties in an actual contract is inferred not from the words expressed by them in such a contract but from their acts during the performance of such a contract. Further, the court observed that if an implied-in-fact contract exists, then a party may recover the damages under the remedy of quantum meruit. Therefore, the court held that no contractual relationship was established between the plaintiff and the defendant just by the mere volunteering of information, and hence dismissed the plaintiff’s claim for damages as a third party.

Right to claim specific performance of the contract

Any party to the contract can claim specific performance of the contract if the monetary compensation is not adequate relief, and there are no standards for determining the value of actual damage because contracts are of a unique nature. In this remedy, the obligated party has no option but to fulfill their part of the obligations in the contract, as compensation is not an adequate relief for the damage that the party suffered due to the breach of the contract. 

In the case of Cumbest v. Harris, (1978), the plaintiff spent fifteen years assembling a stereo system that was used by him for professional recording. Many of the parts of the system were no longer available for purchase and were impossible to replace. The plaintiff had a sentimental attachment to this system. The plaintiff was in need of money and decided to loan this stereo system to the defendant. On the due date of payment of the loan, the plaintiff tried his best to reach the defendant in order to repay the loan and for restitution of the stereo system, which was deliberately avoided by the defendant, due to which the plaintiff paid the money to the landlord of the defendant and claimed equitable relief in court against the defendant. The Supreme Court of Mississippi observed the facts of the case and held that the stereo system was sufficiently unique to fall under the category of specific performance, and no adequate compensation for such a stereo system can be determined for the plaintiff.

Section 2-716 of the UCC states the right of the buyer to claim specific performance of the contract under the following conditions:

1. The contract in which specific performance has been claimed must be of unique nature;
2. There must be inclusion of terms and conditions regarding the payment of price, damages or any other relief in the decree for specific performance;
3. The buyer has the right to claim replevin of the goods identified in a contract if, after reasonable efforts, the buyer was unable to receive the goods from the seller.

How can relief for specific performance be claimed in a third-party contract?

In the case of a third-party contract, if the promisor did not perform their promise to provide rights to the third party in a contract, the promisee may sue the promisor for a specific performance of such contract. (It is provided in the definition of third party beneficiary).

In the case of Cushing v. Levi, (1931), the plaintiff and defendant entered into an agreement for the sale of property. The plaintiff was not well and defaulted in making the interest payment for the property, due to which the defendant canceled the agreement. The plaintiff requested to pay the interest payment with proper compensation for delay, which was refused by the defendant. The defendant was glad that the plaintiff defaulted in the interest payment because he got another deal that was better than the plaintiff. The plaintiff claimed the specific performance of the contract against the defendant, stating that his intent to default in making interest was inadvertent, and he has performed all the other conditions of the agreement. The defendant sold the property to the third party, who was a bona-fide purchaser. 

The Court of Appeal of California, Fourth District, observed from the terms of the contract that time was the essence of the contract between plaintiff and defendant.  The court further observed that plaintiff’s intention was not inadvertent in making the default in interest payment, as he offered the payment with proper delay compensation soon after he knew about the cancellation of the contract by the defendant. The court held that as the defendant disabled himself from conveyance of land or refused to be bound by the contract due to bad faith, the plaintiff shall receive damages for the loss caused by the sale of property to a bona-fide purchaser by the defendant. Further, the court held that the bona-fide purchaser had bought the property in good faith and fulfilled all the obligations for performance of the contract. Therefore, such a bona-fide purchaser is entitled to receive ownership of the property.

Right to claim injunction

An injunction is an equitable relief available to the parties in breach of contract that involves the order of the court to do or not do a specified act(s). It is a relief claimed by the parties to maintain their status-quo by stopping the defendant from taking a particular course of action and thereby protecting themselves from any irreparable harm. 

The injunctions in the US Laws are defined as court orders to do or cease to do a particular action. The remedy, i.e., injunctive relief, are further classified into three categories under Rule 65 of Federal Rules of Civil Procedure which are detailed as follows: 

Preliminary injunctions

The preliminary injunction refers to the order of the court obtained before or during the trial to maintain the status-quo of the aggrieved party before the final judgment. The provision for permanent injunction is provided in detail under Rule 65(a) of the Federal Rules of Civil Procedure. In the case of Winter v. Natural Resources Defence Council, (2008), the Supreme Court of the US held the balancing test for obtaining a preliminary injunction. A court needs to examine the following in granting a preliminary injunction:

1. Whether the aggrieved party is likely to succeed their case on merits;
2. Whether the aggrieved party is likely to suffer irreparable injury without the injunction;
3. Whether the balance of equity and hardship is in the favor of the aggrieved party;
4. Whether the injunction is in favor of public interest.

Temporary Restraining Orders (TROs)

The temporary restraining orders are referred to as temporary injunctions that are granted by the court for a short period of time before the trial between the parties in the court. Generally, the temporary restraining order expires after fourteen days, unless the time period for such order is extended by the court. The court under Rule 65(b) of the Federal Rules of Civil Procedure used a two-part test to determine whether to provide temporary restraining orders, which are as follows:

1. It is clearly apparent from the facts presented through the complaint or affidavit in the court that the aggrieved party shall be subject to irreparable loss or damage before the commencement of trial and hearing the plea of adverse party;
2. The attorney for the aggrieved party shall give in writing to the court if any efforts are made to give notice to the adverse party or the reason supporting the claim, if no notice is required.

Permanent injunctions

A permanent injunction refers to the final judgment of the court relating to doing or ceasing to do a particular act by a person. Such a remedy is issued where the compensation for money is not adequate relief. In the case of Weinberger v. Romero, (1982), the Supreme Court of US held the four step test for obtaining a permanent injunction, which includes the following:

1. The aggrieved party must have suffered an irreparable injury;
2. The remedies available at law, including monetary compensation, is not adequate for the injury caused to the aggrieved party;
3. The remedy in equity is adequate for balancing the hardship between the parties;
4. The permanent injunction claimed should not be against the public interest.

In the case of Boomer v. Atlantic Cement Co.,(1972), the defendant was the owner of a cement company that operated a large cement plant in Albany. The landowners in the neighborhood of the defendant’s company suffered injuries to their property because of dirt, smoke, and vibration emanating from the cement plant. The plaintiff and the other landowners sued the defendant for such a nuisance and further claimed a permanent injunction against the defendant to stop the air pollution caused in their neighborhood. The Supreme Court of Albany County observed that a permanent injunction shall be granted to the plaintiff in cases where a nuisance has been found and further substantial damages has been proved by the plaintiff due to such a nuisance. The court also observed the concept of servitude on land and held that payment of permanent damages to the plaintiff would constitute full compensation for the servitude placed on the land of the plaintiff. The court further granted a permanent injunction against the defendant but permitted the defendant to pay permanent damages to the plaintiff, after which the court shall vacate such an injunction. 

When can an injunction be claimed in a third-party contract

The claim for injunction can also be obtained by the person who is not a party to a contract and acts as a beneficiary in the contract. The various provisions involving injunction in a third-party contract include:

1. Section 4A-503 of the UCC states the details regarding the persons and their obligations in the contract that the court can restrain under an injunction or restraining order in a contract relating to funds transfer. 
2. Section 5-114 of the UCC states that an injunction is considered a remedy to prevent any fraud in a contract involving a letter of credit.

In the case of Gordon v. Impulse Marketing Group, (2006), the plaintiff is the registered user of an internet domain named “Gordonworks.com” in Washington and the defendant is an electronic marketing company that transacts business with Gordonworks.com to send commercial emails to the residents. The defendant with the consent of the customers uses their personal information to transfer such information to third-parties for marketing purposes.

The plaintiff claimed that the defendant violated the provisions of Washington’s Commercial Electronic Mail Act and Washington’s Consumer Protection Act by conspiring with third-parties and sending unsolicited commercial emails to various addresses at Plaintiff’s internet domain. The defendant counterclaims against the plaintiff in the capacity of a third-party plaintiff for interference with their business. The plaintiff in the capacity of third-party defendant claimed a temporary injunction against the third-party plaintiff to stop them from doing their business and further sending commercial emails to the third-party defendant. 

The US District Court of Washington held the grounds for seeking temporary or permanent injunction in a third-party contract, which are as follows:

1. That the party must have a clear and an equitable right;
2. That the party must have a well-grounded fear of immediate invasion of that right;
3. That the acts complained by the party must result in or shall result in an actual and substantial injury to him.

The court further held that any request for injunctive relief will be denied if the party fails to  establish any one of these grounds for injunctions. Therefore, the third-party defendants failed to prove the absence of complete and adequate remedy at law, due to which their claims were dismissed by the court.

Right to the recovery of subject-matter of the contract

The subject-matter remedy in a contract provides the aggrieved party with a right in personam, which means it gives rights against the defaulting party to a contract. These rights are created through a contract between the parties. The private legal rights in personam of quasi-contracts are created through the implication of law. The subject matter of a contract can be a right ancillary to another right, which is known as an accessory contract. These types of contract are different from the principal contract and include pledges, mortgages, guarantees, warranties, etc. Therefore, the subject matter of any contract must be for legal purposes to make the contract enforceable. Section 2-703 of the UCC states the remedies for sellers to recover the subject matter of their contract. 

In the case of Pacific Gas & Electric Co. v. G.W. Thomas (1968), the defendant entered into a contract with the plaintiff to provide labor and equipment necessary for the plaintiff’s company and further agreed to perform the work at its own risk and to indemnify the plaintiff against any loss, damage or liability resulting from any act due to the performance of contract. The property of the plaintiff was damaged due to the acts of the defendant during the performance of their duty under the contract. The plaintiff argued that the defendant agreed to indemnify against all the losses caused due to the acts of the defendant, whereas the defendant argued that he would be liable for causing damage to the third-party and not to the property of the plaintiff. 

The Supreme Court of California observed that the contractual language includes a third-party indemnification clause, but after interpreting the terms of the contract, the defendant is considered to be liable for paying damages to the plaintiff. The court allowed the party to present the extrinsic evidence to clearly show the intention of the parties while forming the contract and not to change the terms of the contract. The court further held that the contract involved indemnity clauses that usually cover third-party, and plaintiff property shall not be covered under such indemnification. 

Third-party cases regarding the remedy of restitution to the claimant 

Section 48 of Restatement Third of Restitution and Unjust Enrichment states the general principle of payment by a third party to the defendant in the contract between claimant and defendant, to which claimant has better legal right. In such cases, the claimant is entitled to restitution from the defendant in order to prevent unjust enrichment. 

Some of the cases where the claimant has better legal rights against the defendant in a third-party contract are categorized as follows:

Recovery by claimant for an expense which has been reimbursed to defendant by the third party

In the case of Wayne County Produce Co. v. Duffy Mott Co. (1927), Duffy Mott sold their product by specifically charging taxes from the customers, which were later paid by them to the government. The government stated that no tax payment is required on their product and refunded the amount of tax to the company. The customers sued the company to refund the amount paid as tax for the product. The Court of Appeal of New York held that customers are liable to pay only that amount as taxes, which is required by the defendant to discharge their liability to the government. Therefore, in this case, the customers have overpaid and are entitled to restitution of such overpayment from the amount refunded to the defendant by the government.

Recovery by claimant in circumstances where defendant mistakenly receives benefits regarding proprietary or other entitlements of claimant

In the case of King County v. Odman,(1941), the defendant as a landlord received rent from the tenant on a property that was further acquired by the plaintiff due to the defendant’s non-payment of property taxes to the government. The defendant and the tenant, both, were not aware of such an acquisition of land by the plaintiff for a year, and the tenant continued to pay the rent to the defendant. The plaintiff claimed an amount of rent from the defendant after such an acquisition of the defendant’s property. 

The Supreme Court of Washington held that it is immaterial that the lease between the defendant and tenant was extinguished when the property was acquired by the plaintiff, and the plaintiff is not entitled to any benefit from the provision of the lease, as there exists no privity between the plaintiff and defendant with respect to the money received from the tenant. The court further held that money was paid by the tenant for the use of property owned by the plaintiff, which was received by the defendant under a bonafide mistake of fact. Therefore, the plaintiff is entitled to such a rent amount from the defendant on the principles of quasi-contract. 

Recovery by the claimant for money mistakenly paid to a third party

In the case of Palo v. Roger (1933), the city of Stamford provided an amount as estimated damage to the defendant for establishing a new building in front of the defendant’s property. The defendant’s property was mortgaged to several mortgagors, of which the first mortgagor was the plaintiff, who claimed the damage amount received by the defendant on that mortgaged property. The Supreme Court of Connecticut held that the plaintiff should have been notified regarding the establishment of the building to have an opportunity to be heard as to the amount of the award to which he has a claim prior to the owner. Therefore, the plaintiff is entitled to recover the amount the defendant received as damages on the property.

Classification of third party beneficiary

The third party in a contract becomes a beneficiary due to specific circumstances in which the contract was either created with an intention to provide a benefit to the third party or there were certain circumstances surrounding the contract that granted a benefit to a third party in the contract. 

For instance, P and Q entered into a contract to deliver a product to D. In this contract, P is the promisor who agrees with Q, who is a promisee, to provide a benefit in the form of consideration to D. Therefore, D acts as a beneficiary in this contract, and third-party beneficiary laws define the rights of D to enforce the provisions of the contract between P and Q. 

Section 302 of the Restatement (Second) of Contracts classified the third-party beneficiaries into two categories, namely intended beneficiaries and incidental beneficiaries, which are detailed as follows:

Intended beneficiary 

An intended beneficiary refers to an individual / entity who has been identified as a third party in a contract where the parties involved in such a contract intend to provide certain benefits through the performance of their promises in the contract. They are also referred to as “Direct Beneficiary” in a contract. Generally, intended beneficiaries get directly named in the agreement formed for the execution of a contract, but it is not necessary that these beneficiaries are identified only at the stage of contract formation. 

They can be identifiable at later stages through the parties involved and have the right to enforce such a contract even when either of the parties has not directly promised them such benefit through the contract. Contracts involving intended beneficiaries are made with the intention of granting benefits to such beneficiary, or such intention arises at a later stage of contract. Due to the intention of parties to provide any benefit to the beneficiary, intended beneficiaries become entitled under the laws of contract to assert their rights in such a contract, especially during circumstances involving breach of contract.

In the case of Scarpitti v. Weborg (1992), the Hon’ble Supreme Court of Pennsylvania held the two part test to determine whether a third-party falls under the category of intended beneficiary. If a third party satisfies both parts, the claim as an intended beneficiary can be asserted in the contract. The two part test conditions are mentioned below-: 

a) The recognition of beneficiary’s rights must be “appropriate to effectuate the  intention of parties”; and 

b) The performance must “satisfy an obligation of the promisee to pay money to the beneficiary” or “the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.”

When is a third party considered an intended beneficiary

There are certain elements that are required for the third party to be considered an intended beneficiary. These are as follows:

Intention

The parties involved in the contract shall clearly and specifically state the intention to create a legal relationship with the third party. Such intention shall be formed explicitly either through the contract itself or through any circumstances which may surround the contract.

Consideration 

The consideration in a contract between the promisor and promisee should be included in such a way that it ensures the performance of either party benefits the intended beneficiary. The intended parties should also have some legal interest involved in the performance of the contract. 

Examples of intended beneficiaries

The most common intended beneficiary contract includes a life insurance policy where the insurance company (“Party X”) promises to insure the individual (“Party Y”) who holds an insurance policy by making payment to the beneficiary (“Party Z”) in case of the insured individual’s death or upon the expiry of the period set by the insured individual. The life insurance policy clearly outlines the intention to create a legal relationship with Party Z and further highlights that the consideration of providing benefits to the beneficiary is a significant factor in such a contract. Therefore, in such contracts, Party Z is not directly involved between the insurance company and the insured individual but is entitled to receive the benefits arising out of such a life insurance policy.

Another familiar example of an intended beneficiary contract is when a father purchases a mobile phone explicitly for the purpose of gifting it to his daughter. In such a contract, the father shall be the promisee, and his daughter shall be the intended beneficiary for whose benefit the contract is formed. These types of contracts shall also fall under the category of intended beneficiary contracts, as it fulfills both the elements required to create an intended beneficiary contract. 

Types of intended beneficiaries

The Restatement (First) of Contract under Section 133 classified the third-party beneficiaries into three categories, namely the donee beneficiary, the creditor beneficiary and the incidental beneficiary. This provision states that if the purpose of the promisee in obtaining the performance of a contract is to provide a gift or confer any right to the third party in a contract, such beneficiary obtaining a right under the contract is known as Donee Beneficiary. However, when the purpose of the contract is to fulfill a duty of promisee in a contract towards the beneficiary, such beneficiary is known as Creditor Beneficiary.  The contracts, including intended beneficiaries, further combined the creditor and donee beneficiary into a single category under Section 302 of Restatement (Second) of contracts, which are detailed as follows:

Creditor beneficiary

A contract involving a creditor beneficiary consists of three parties, namely: 

• Promisor;
• promisee or the debtor; and 
• the creditor. 

A debtor is a person who owes a sum of money or debt to the creditor. Such a debtor enters into a contract with the promisor to discharge the debt owed to the creditor. These types of contracts ultimately benefit the creditor, who acts as a third-party beneficiary in such a contract between the promisor and promisee, where the promisee is obligated to pay a debt to the creditor, and the promisor, through implementing the promises made in the contract, releases the burden of debt owed by the promisee. Therefore, a creditor beneficiary is an individual or an entity who has lent a certain amount of money to the promisee and shall receive repayment of such amount from the promisor through performance of the contract. 

For instance, the promisor agreed to buy the property of the promisee through the sale deed. There is a mortgage debt against the property that the promisee owes to the creditor. The promisor also agrees to pay off the mortgage debt against the property through performance of the contract. Therefore, under such a contract, the creditor becomes the beneficiary who can claim the amount against the debt from the promisor after execution of the contract. 

In the case of Hartman Ranch Co. v. Associated Oil Co., (1937), the Hon’ble Supreme Court of California observed that the creditor beneficiaries in a contract are recognized under Section 1559 of the California Civil Code, which provides that any contract made particularly to benefit the third-party may be enforced by such third-party before the contractual party decided to rescind the contract. It was further observed by the court that in contracts involving creditor beneficiaries, the main purpose of such contracts is not to provide a benefit to the third party but to secure a charge of debt or performance of duty to the third party. 

When can a creditor beneficiary claim a right under the contract? 

The Creditor Beneficiary has all the rights to enforce the benefits under the contract from the promisor. If the promisor fails to perform the contract, the creditor beneficiary has the right to sue the promisor for such non-performance of the contract. The essential elements required for such enforcement of rights by the creditor are as follows:

Identification of creditor in the contract

• The creditor must be identified as a beneficiary under the contract; or 
• The creditor must receive performance directly through the promisor; or 
• There must exist certain circumstances surrounding the contract which clearly states that the promisor shall provide a benefit to the creditor through the contract.

Vesting of creditor’s right 

The creditor beneficiary can enforce the rights under the contract only at or after the time when the rights have been vested, which means that such rights must have come into existence through the contract. Vesting of a creditor’s rights as a beneficiary takes place only when conditions precedent in a contract have been fulfilled. The creditor cannot sue for the breach of the contract before the condition precedent has been satisfied in the contract, as such right is not considered vested in the creditor. 

Modification of creditor beneficiary contract

Any change or modification in the creditor beneficiary contract can be made without the approval of the creditor only before the vesting of the creditor’s right in the third-party contract. After such vesting of the right to the creditor, the contract becomes enforceable by the creditor as a beneficiary, and there can be no further modifications to the contract without the approval of the creditor.

Donee beneficiary

Another type of intended beneficiary is a Donee Beneficiary. When a contract is formed in which a promisee intends to provide some benefit to an individual or an entity through the performance of the contract by the promisor, the beneficiary is known as a donee beneficiary. In this contract, the promisee does not owe any debt to the beneficiary but wants to provide a benefit or gift to the donee through the contract. The donee beneficiary is different from other third-party beneficiaries in that they shall receive a benefit or gift through the contract as a pure donation, even when they are not aware of the existence of the contract itself or of consideration in the contract. 

For instance, in a life insurance contract, an individual made an insurance policy with the insurance company and set an amount to be issued after his death to his son. After the death of that individual, the son can claim the amount in the insurance policy even if the son is not a party to the contract. The amount shall be transferred to the son after his father’s death, even when the son is not aware of the existence of any such contract made by his father.

In the case of Martinez v. Socoma Companies, Inc, (1971), the Hon’ble Supreme Court of California observed that to identify a donee beneficiary in a contract, the intent of the contractual party must be either to gift him or confer him a right against the promisor. The donee beneficiary can claim such benefit under the contract if the intent of the promisee to provide such a gift is understood by the promisor from the nature of the contract and the circumstances accompanying its execution. The court further observed that a person is considered a donee beneficiary even when that person is not the intended recipient of the gift if it appears from the terms of the contract that the purpose is to confer such a right against the promisor through performance of the contract. 

When can a donee beneficiary claim a right under the contract 

The donee beneficiary can enforce the contract rights if the promisor fails to fulfill their obligation towards the donee in a contract. Therefore, the donee beneficiary can sue the promisor for such non-performance of the contract and claim the rights that were intended to be transferred to the donee through the performance of contract by the promisor. The essential elements required for such enforcement of rights by the donee in a contract are as follows:

Identification of donee in a contract

The donee is clearly identified as a beneficiary in the contract, as the contract is made with the intention to provide some kind of benefit or gift to the donee. The donee shall receive the benefit immediately after the execution of the contract only if such donee is specifically named as a beneficiary under the contract between the parties.

Vesting of donee’s rights

The rights of the donee beneficiary under the contract is vested as soon as the parties to the contract fulfill their respective promises in the contract. Beneficiary rights are vested in the donee even when the donee has no knowledge of the existence of the contract. Such rights become irrevocable upon completion of the contract by the parties and can be revoked only with the consent of the donee.

Modification of the donee beneficiary contract

The rights of the donee as a beneficiary in a contract are different from other third-party rights. Once the contract is made between the parties, approval of the donee is required to make any modifications to the terms of the contract. The rights granted to the donee are vested immediately after completing the contract between the parties. Due to immediate vesting of rights in the donee, the donee has the power to enforce such rights, and further such approval of the donee is mandatorily required to make a change in the contract.

Essential elements for enforcement of rights of intended beneficiaries

The essential elements required to enforce the rights or benefits provided to the intended beneficiaries in a contract are as follows:

A valid and binding contract

The contract made for the benefit of the intended beneficiaries must be a valid and binding contract between the parties. The grounds required for considering a contract as a valid and binding contract are as follows:

Valid offer and acceptance 

The contract is formed when the offeror expresses their willingness to make an offer to the offeree in the contract. The offer must be accepted by the offeree within a reasonable time. When the offer is duly accepted by the offeree with all the terms and conditions offered by the offeror, such offer becomes an agreement. The offeree can anytime revoke such an offer prior to a valid acceptance of the offer. The traditional mirror image rule provided by the common law states that an acceptance is considered to be a valid acceptance if the acceptance given by the offeree is the mirror image of the offer.

In modern commercial transactions, the standard form of contract is applied where the offeror and offeree use contract negotiations prepared by their legal counsel for such offer and acceptance in the contract, which is commonly known as “battle of forms”. The Section 207 of Uniform Commercial Code governs the battle of forms issues related to sales of goods, which dispenses with the requirement of the traditional rule of mirror image for acceptance of an offer. The provision states that it will amount to a valid acceptance by the offeree if they accept the contract by varying the terms of the original contract.

Mutual consent 

   It is an essential element for the formation of a valid contract. It refers to the concept of    meeting of minds, which requires all parties to a contract to agree on the same terms and conditions of the contract without causing any kind of coercion, fraud or mistake in such consent. If either party changes the term of the contract, it becomes a counteroffer. It is established through the process of valid acceptance and offer, and some variations can take place in the original contract through contract negotiations. 

Consideration

Consideration is an important element in making the contract legally valid. It means something of a value in return for performance of any task in the contract. A contract without consideration can be a valid contract in cases of promissory estoppel, where the contract without consideration is enforceable if non-performance of such a contract leads to injustice. Further, a contract can also be valid without consideration in cases of good faith modification provided under Section 2-209 of the Uniform Commercial Code, where any modification in the contract is made by the parties in good faith and such a modified contract is enforceable.

Capacity and identification of parties

The parties that are competent can form a valid contract. It refers to the ability of a party to satisfy the elements required for entering into a valid contract. The capacity of parties includes the age of a party which must be major, the person should be of sound mind and should not be disqualified from entering into contract as per prevalent common laws of contract. Further, the parties to the contract should be clearly identified. The contract between the parties must clearly specify the details of the name, addresses, rights and obligations of all the parties involved.

Legal enforceability

A contract should be legally enforceable to become a valid and binding contract. It means that the transaction involved in the contract must be legally binding, as per the provisions of contract laws. Any contract between parties to perform any obligation that is against the law, against public policy or is fraudulent does not amount to a legally enforceable contract. 

Third-party must be explicitly identified 

In the contract involving a third-party beneficiary, such a third-party should be clearly identified by the contractual parties through the terms and language of the contract that they intend to provide rights through such third-party through performance of their contract. The identification in the contract is a clear proof on which the third party can sue the contractual parties and claim performance of such a contract. 

In the case of Greg Beech, Logistics, LLC v. Cross Country Construction, LLC, (2015), plaintiff brought an action against the defendant for breach of contract and equitable claim over a construction project in New York. The plaintiff was a subcontractor hired by the construction manager to provide scaffolding for the construction project between the defendant and the construction manager. The plaintiff claimed his right as an intended beneficiary in the contract when the defendant delayed performing the project for more than 20 months, and plaintiff further tried to seek damages for such negligence caused by the defendant. The Supreme Court of New York dismissed the claim of the plaintiff as an intended beneficiary because from the language of such contract, the plaintiff was not explicitly identified as an intended beneficiary and further, the terms of the contract also stated that there shall be contractual relationship only between the defendant and the construction manager. 

Benefit to the third parties

The contract should be formed to provide benefit to the beneficiary, which must be intended specifically in the contract. The third party must be clearly identified as a beneficiary, either directly in the contract or through any circumstances surrounding the contract. 

The intention to provide some benefit to the beneficiary should be immediate rather than incidental. The language of the contract must be in a way that it indicates clearly that parties to the contract have an obligation to provide benefit to the beneficiary in the contract. The beneficiary can enforce their rights in such a contract when the parties fail to perform their obligation, which they clearly intended to provide through the contract.

In the case of Commissioner of Department of Social Services v. New York Presbyterian Hospital, (2018), the Hon’ble Supreme Court of New York held that it is a well-established rule that a third party cannot be considered to be an intended beneficiary in a contract unless the contractual parties’ intention to benefit the third party is apparent from the face of the contract.

Rights are vested 

The intended beneficiaries are entitled to receive the benefit of a third-party contract only when their rights have been vested. The timing for the vesting of rights also matters, and such rights should be vested before the breach of contract to make it enforceable by the beneficiary. 

The rights of the intended beneficiary under a third-party contract can be modified only when there has been no vesting of rights taken effect. Once the rights are vested in the beneficiary, such modifications or changes in the contract can be made only after the approval of the intended beneficiary in the contract. 

Incidental beneficiary

An incidental beneficiary is an individual/entity that derives benefits from the contracting parties but was not intended by the parties to derive such benefits from the contract. This type of contract was not formed explicitly to provide benefit to the individual or entity, but unintentionally becomes the third-party beneficiary in the contract and benefits from the execution of the contract. The incidental beneficiaries are not granted any rights under the contract and are prevented from taking any legal action to enforce the terms of the contract. Therefore, these types of beneficiaries are not parties to the contract, nor is such a contract made with the intention of providing them with benefits. 

In the case of Marlboro Shirt Co. v. American Dist. Tel. Co., (1951), the Court of Appeal of Maryland held that a person can claim a benefit in a contract as an intended beneficiary if the contractual parties have recognized such a beneficiary as a primary party in interest and as privy to the promise. Further, the court also observed that an incidental beneficiary has no right to enforce any contract benefits from the promisor or promisee but can benefit indirectly based on the relationship between the parties. 

Example of incidental beneficiary

For example, in a contract between the property owner and the construction company, the owner of the property approached the construction company to build the house. The construction company further hires the sub-contractor to fulfill the obligations of the contract and provide the materials that are necessary to start the construction of the house. 

Here, the subcontractor becomes the incidental beneficiary in the contract between the owner of the property and the construction company. The contract was not specifically made to benefit the sub-contractor, but eventually, the sub-contractor benefited from such a contract as it was hired by the construction company. The sub-contractor is not entitled to any claim or any right under such a contract in the event that the terms of the contract are breached by either party. 

How are incidental beneficiaries different from intended beneficiaries?

The distinction is made between the incidental and intended beneficiary by the courts through establishing a reasonable person test. This test helps in ascertaining whether a reasonable individual/entity had the intention and consideration to provide benefits to the third party, and consequently, the third party has the right to enforce benefits in the contract due to the intention of the contracting parties. The determination of such classification was made taking into account several factors, which are as follows:

• It must be examined clearly to determine whether the performance of the contract by the contracting party was directly intended for the third party in question. If through the performance of the contract, the third party is directly rendered in the contract, such party is an intended beneficiary; otherwise, it is an incidental beneficiary. In the case of HTRF Ventures, LLC v. Permasteelisa North America Corporation (2019), the Hon’ble Supreme Court of New York observed that a third party has a right to enforce the contract under two conditions which include: 

a) when the third party is the only person who could recover from the breach of the contract in cases of non-performance; and

b) when it is clear from the language of the contract that contractual parties have an intent to permit such enforcement of rights to the third party.

• The level of control that the third party, as a beneficiary, had over the details of the performance of such a contract between the contracting parties. If there are any modifications or changes in the contract, the approval of intended beneficiaries is required for such modifications. Such rules relating to discharge and modification of contracts involving intended beneficiaries are briefly provided under Section 311 of Restatement (Second) of Contracts. 
• The third party as a beneficiary is explicitly mentioned in the contract, as in the intended beneficiary contract, an agreement is made between the parties for the intended beneficiary. If beneficiaries are not named in the contract and they become a part of the contract through other circumstances surrounding the contract, such beneficiaries are considered incidental beneficiaries. In the case of Dormitory Authority v. Samson Construction Co. (2018), the Court of Appeal of New York held that explicit language must be used by the contractual parties in the contract to determine their intention to benefit the third party by naming such third party in the contract. In the absence of such explicit language, the third party is considered merely an incidental beneficiary with no right to enforce the contract.

Serial No.	Basis of Differences	Intended Beneficiary	Incidental Beneficiary
	Meaning	Intended beneficiary refers to a third party in a contract to whom the contractual parties have an intention to provide certain rights by creation of such contract.	Incidental beneficiary refers to a third party in a contract to whom contractual parties do not have intention to provide any right in the contract, but such person receives benefit indirectly through performance of such contract.
2.	Benefits in the Contract	These types of beneficiaries benefit from the formation of contracts between the contracting parties.	The incidental beneficiaries are benefited from the performance made by the contracting parties in the contract.
3.	Name in the Contract	The intended beneficiary is explicitly named in the contract.	The incidental beneficiary is not mentioned explicitly in the contract but made a part of such contract while the parties are performing their respective promises in the contract.
4.	Consent in the Contract	The acquiescence of intended beneficiaries are required to make any alteration in the contract after immediate vesting of rights.	There is no requirement of acquiescence from the incidental beneficiaries for such alteration, as they are not granted any rights by the contracting parties through the contract.
5.	Enforcement of the Contract	The intended beneficiary has all the rights to enforce the contract benefits by compelling performance of such contract from the obligor.	The incidental beneficiary has no right to enforce the contract benefits from the obligor in case of non-performance.
6.	Example	Eg: Sam owes William $600 and William owes $600 to Emmanuel. Sam and William enter into a contract to benefit Emmanuel, in which Sam shall pay $600 to Emmanuel on behalf of William.	Eg: Lisa hires a contractor to renovate her house. The contractor further hires various laborers to perform different tasks in the work of renovation. These laborers indirectly receive benefits through contract between Lisa and the contractor.

Enforcement of rights of incidental beneficiaries

Any third party in a contract has the right to enforce the terms of the contract only when such contract is made with the intention and consideration to bestow such benefits on the third party by the contracting parties. The incidental beneficiaries are considered different from the other third-party beneficiaries as there are no such rights bestowed on them particularly through the contract. 

These types of beneficiaries are not the exception to the rule of third-party beneficiaries, as inadvertently, incidental beneficiaries reap gains through this contract but lack any right to compel or claim such gains through the contract. In other words, it means that if any contract is breached in the future, the incidental beneficiary in those circumstances cannot claim their benefit or any other rights from the contracting parties, even if they suffer any loss due to such a contract. 

Therefore, the benefits that are unintentionally bestowed on the incidental beneficiary by the contracting parties shall be terminated as soon as the contracting parties fail to perform their obligations under the contract. Further, such types of beneficiaries lack the bargaining power to claim those benefits that the contracting parties failed to provide through such a contract. 

Assignment and delegation

An assignment and delegation in a contract is a method through which the contractual party can transfer their rights and duties to a person who is not a party (third-party) in a contract. Such transfers of rights and duties can be partly or wholly as per the requirements of the transferor for the performance of their obligations under the contract. Generally, no permission is required from the other party in the contract for transferring of such rights and duties, except in certain cases where such transfer is not permitted under the laws of contract. 

Assignment

What is meant by assignment in a contract

In a contract, rights and duties are created between two parties, namely: promisor and the promisee. When any rights or benefits of the promisee obliged to be received by the promisor are transferred to a third party, such transfer of rights of the promisee to a third party is known as an assignment in a contract. The contract of assignment also includes a delegation of duties in the contract. Therefore, the assignment of contracts involves two main elements, which are as follows: 

a) The transfer of rights from the assignor to the assignee in the contract; and 

b) The delegation of duties to be performed in such a transfer of rights from assignor to the assignee in the contract. In such an assignment, the delegatee has conferred a promise to perform the duties. 

For instance, if Aman contracts with Rahul to teach him yoga for $100, Aman can assign this contract to any other person to fulfill the performance of his obligation in the contract. If Aman assigns this contract to his colleague Mihir, then Mihir shall have the duty to teach the yoga to Rahul, as well as a right to receive consideration of $100 from Rahul for such performance of contract. 

The laws governing the rule of assignment are provided under the common law of contracts and also under the Uniform Commercial Code. Section 210 of Article 2 of the Uniform Commercial Code explains the concept of assignment in detail and states that it includes the transfer of rights as well as the delegation of duties from an assignor to an assignee in a contract.

The various Sections under Article 9 of the Uniform Commercial Code briefly detailed the secured transactions in which the rule of assignment is applicable in assigning rights to payment in security interest agreements, which are detailed as follows:

1. Section 9-209 of the UCC briefly states the duties of secured party if the account debtor is notified regarding the contract of assignment; 
2. Section 9-406 of the UCC briefly describes the discharge of account debtor in case of notification of assignment, the rules regarding identification and proof of assignment and rules regarding restriction on assignment of accounts, chattel, etc.; 
3. Section 9-408 of the UCC briefly states the rules regarding terms imposing restriction on assignment of promissory notes, health care insurance receivables, etc.; 
4. Section 9-409 of the UCC briefly states the restriction on assignment of letter credit rights;
5. Section 9-514 of the UCC briefly states the power of a secured party of record in a contract involving assignment.  

In an assignment, the parties involved in the contract are named as – 

• obligor; 
• obligee; and 
• assignee

The obligor is the individual or entity who has the duty to perform the obligations of the contract and, through such performance, provide contract benefits to the obligee. The obligee is an individual or an entity who has the right to receive benefits from the obligor through the performance of the contract. An assignee is a person to whom the benefits or rights of the obligee bestowed due to the performance of the contract are transferred through the assignment. The rights or benefits transferred by the obligee to the assignee are extinguished, either wholly or partly, through such a contract. 

In other words, the assignee steps into the shoes of the obligee once the rights of contract have been transferred to them in whole or in part by the obligee. The assignment is made by the obligee, who is considered both as an obligee as well as a transferor. 

For example, John has rented his car to Michael for $500 per month. Any unintentional damage in the car or any further fixation required to the car by John shall be fixed by Michael. Michael shall deduct the expenses incurred in fixing the issues with the car from the rental amount paid to John. John shall only pay for those expenses that have not been incurred due to the fault or mistake of Michael. John assigns William as an assignee in the contract. Now, William stands in the shoes of John and is entitled to receive the monthly rent from Michael as well as incur the expenses required for the maintenance of the car. 

Essential requirements for considering an assignment in a contract

The obligee, also known as the assignor, has the right to assign the rights of the contract to the assignee. For the enforcement of such rights or benefits bestowed to the assignee by the obligee, certain elements are mandatorily required, which are as follows:

Intention to transfer rights

The obligor who becomes the assignor after transferring their rights to the assignee in the contract must explicitly express their intention to transfer those rights in the contract. Such a transfer of rights or benefits to the assignee must be vested after the immediate completion of the contract, leaving no scope for future vesting. Therefore, the intention of the obligee regarding the transfer of rights to the assignee in the contract must be so clear that no further action shall be required to convey such an intention of assignment in the contract. 

Assignment can be oral or in writing

The assignment in a contract can be made both orally and in writing. As per the common law of contracts, the assignment is not required to be in writing. However, the assignment of rights in a contract for sale of goods should be in writing when the agreement involves goods worth $500, or more and if the original contract was subject to Statute of Frauds. This provision is provided under Section 2-201 of the Uniform Commercial Code. Therefore, any individual or an entity can assign the benefits of the contract orally unless the value of the contract exceeds the amount of $500 according to the Uniform Commercial Code.

Consideration

The contract involving the assignment of rights by the obligee to the assignee includes both gratuitous and non-gratuitous assignments. There is no need for consideration in a contract including a gratuitous assignment, and the rights are transferred to the assignee by the obligee as a gift. Further, a contract involving a non-gratuitous assignment includes some consideration due to which the rights of the obligee to a contract are bestowed on the assignee.

Acceptance and revocation

The assignment in a contract becomes functional only when the assignee has accepted such assignment of contract benefits by the obligee. When any assignment is made to the assignee by the obligee, the assignee must clearly state their intention to accept or revoke such assignment. In cases where the assignee has given consideration to the obligee for the assignment in the contract, then such consideration provided by the assignee is contemplated as acceptance by the assignee of the contract of assignment.

Notice

The obligor in the contract must be aware of the fact that the obligee in the contract has transferred their rights to the assignee through the performance of the contract. The obligor is discharged from the contract of the assignment if the obligee has transferred their rights in the contract to the assignee without providing a notice to the obligor. Therefore, the assignee in a contract cannot claim the contract benefits from the obligor if it is transferred by the obligee without any notice, even when consideration is made by the assignee for such an assignment. The obligee shall return the consideration provided by the assignee for the assignment when such an assignment of rights has taken place without notice to the obligor.

Exceptions related to assignment in a contract

The rights or benefits of the contract endowed to the assignee by the obligee are limited to the extent of the rights the obligee has received through the contract. The obligor in the contract has the right to avoid the obligee’s attempt to enforce the contract. Further, the obligor also has the same rights against the assignee as it did against the obligee once the contract benefits are conferred by the obligee on the assignee. 

The details of the rights and liabilities of the assignee against the assignor has been mentioned under Section 318(1) of Article 9 of the Uniform Commercial Code. The rights or benefits cannot be assigned to the assignee by the obligee when the contract of assignment falls under the following conditions:

Material change in the contract

The contract involving an assignment cannot materially change or modify the obligations of the obligor by implementing such an assignment. It means that the application of  assignment in a contract cannot consequently lead to a possible increase in the risk of the obligor, overburden the obligor or otherwise decrease the advantage granted to the obligor in the contract. The rights or benefits in the contract cannot be assigned to the assignee by the obligee if any of the above circumstances arise in carrying out the assignment in a contract.

Further, no minor changes or modifications in the duty of the obligor shall affect the contract of assignment, as such minor changes do not threaten the rights of the obligor. It is important to identify what changes in the contract amount to a material change in the rights of the obligor. For example, a change in the individual to whom the payment shall be made by the obligor or the mode through which such payment is to be made by the obligor does not amount to a material change in the contract, which has the possibility to negatively impact the rights of the obligor in the assignment of the contract. 

A person living in an apartment has to pay every month the maintenance cost of society. If such a person moves out of town for a few years, then such costs shall be borne by other members of his family who are availing that residence for their living. In such circumstances, the rights and obligations in a contract are assigned from the person to his family members and such rights remain effective till the time the family members pay the maintenance cost for residing in the apartment. The obligor has automatically consented to the assignment due to subsequent circumstances surrounding the contract leading to the assignment of duties from the obligee to the assignor. 

In a contract between the company and the consumer, the company has mentioned in its contract, a clause which bestows the right to the company to transfer, trade and assign any right to another company,, which ultimately binds the customer by such sale, exchange, and assignment. In such a contract, consent of the customer is not necessary for assignment of the contract to become effective and therefore, the rights of the company are transferred to another company immediately without any formal consent of the consumer.

The consent of the obligor becomes necessary in contracts where the obligor has a personal interest in or personally involved in the contractual transactions involving assignment of rights. Such transactions cannot take place without notice to the obligor of assignment of rights in the contract whereas in transactions which do not affect the personal interest of the obligor, the assignment of duties and rights can take place without the formal consent of the obligor in the assignment of the contract.

Transactions affecting the personal rights of the obligor

The benefits received through the contract which personally affect the rights of the obligor in the contract cannot be assigned. There are certain types of contracts in which the consent of the obligor significantly matters in the assignment of rights by the obligee to the assignee, as it personally affects the interest of the obligor of the contract. 

For example, if an insurance company is insuring the car of an individual, that individual cannot assign his right to any other person because it matters to the insurance company under whose name the car is insured by them through the contract. If the individual wishes to make a change in the name of the insurance policy for the car, such policy needs to be altered by providing a notice to such effect to the insurance company. The person residing as a tenant in a house cannot sublet the house or their tenancy to another person without the consent of the landlord, as it personally affects the right of the landlord, and it matters to the landlord as to who is residing in the rented house availed by the tenant for residing purposes.

Prohibition of assignment through the statutes

An assignment cannot be applied to the contract if such an assignment is explicitly forbidden by the statute, law or public policy. Further, the assignment cannot be  implemented if any circumstances arise subsequently after the formation of the assignment contract which lead to the prohibition of such assignment by the statutes or laws of the country. 

Further, there are certain assignments of contract, which are prohibited or forbidden by the several federal and state laws of the United States. Such assignment of contracts are prohibited even in the absence of any explicit statute or law made by the government. For example, the government regulates and prohibits the assignment of future emoluments to protect people from facing any kind of fraud regarding delay in payment and also ensuring that people should get paid on time for the services rendered by such people.

Prohibition of assignment through the contract

The parties to the contract can transfer their rights without any restrictions to the assignee in a contract. Such parties to contract are only allowed to transfer their rights and duties as an obligee to the assignee, but does not allow the transferring of the duties of obligee as an assignor to the assignee. 

The assignment in a contract cannot take place under the circumstances by which the contract itself precludes the assignment between the obligee and the assignee. Such conditions can arise if, it is explicitly mentioned in the contract or during the performance of the contract, any circumstances which lead to prohibition of assignment in the original contract. Further, even if the contract explicitly prohibits the assignment of rights or benefits, a right to damage can be exercised in circumstances of breach of contract as outlined under the Section 210(2) of Article 2 of the Uniform Commercial Code related to contracts for goods.

Additionally, there shall be no prohibition on assignment of rights of the obligee in any contract in which the amount has become payable or has been already paid. This rule has been clearly outlined under Section 318(4) of Article 9 of the Uniform Commercial Code. For example, if there is a contract between the parties relating to sale of house, precluding the assignment of rights to the assignee. The buyer has fulfilled his duty of depositing the consideration amount to the seller for buying the house, but the seller does not convey that property to the buyer even after receipt of the consideration. The buyer, further assigns his right to obtain title to his son. In such cases, the assignment becomes effective and the son of the buyer may sue the seller for the title of the house as the seller has not fulfilled his obligation even after receiving the consideration from the buyer. 

Assignment of future rights in a contract

There are certain types of contracts in which rights are not assigned immediately but are contingent on a future event. If, in any contract, rights are assigned to the assignee by the obligee, which will become effective in the near future, then such assignments of rights are effective and not prohibited by the laws of the contract. Only those rights are prohibited from assignment by the obligee in which such rights shall arise from future contracts. In other words, for the assignability of rights from the assignor to assignee, the contract must be in existence. The rights conferred in such an existing contract can be assigned in the future by the assignor to the assignee. 

For example, Joseph has contracted with a company for 3 years to provide his legal services for a consideration of $1000 per month. Joseph further takes a car loan from the bank. The bank provides a loan to any person on the basis of the person’s current job, earning and overall assets. Joseph assigns the rights to receive his earnings from the company to the bank for 2 years in order to repay his loan from his current job. The assignment of rights are effective in these types of contracts, as Joseph transferred his future right of receiving the whole amount for the repayment of the loan to the bank through his existing employment contract with the company.

Assignment of partial rights

Generally, in a contract of assignment, the assignor can assign the rights or benefits partly or wholly to the assignee. The assignor can transfer such rights partly to the assignee only under circumstances where the obligor is capable of fulfilling the obligation of said partially transferred rights from the remainder of their obligation in the contract. Further, the assignment of a contract in which a part of payment is due is always effective and enforceable by the assignor and the assignee. For enforcement of such rights in the court, the assignor and the assignee cannot sue the obligator for non-fulfillment of obligations in the contract until both the assignor and the assignee are made party to the suit. 

For example, James owes Henry $500, and Henry further assigns his right to receive payment of $250 from James to David. David demands $250 from James, and James was not able to understand the relationship between Henry & David and further objected to such assignment in the contract. Due to the non-fulfillment of duties by James, David sued James in court to fulfill the obligations of the contract. The court asked David to make Henry also a party to the suit as both assignor and assignee can sue the obligor for their arrangement of assignment in the contract, which is objected by the obligor.

Assignment of successive rights

There are certain types of contracts in which the assignor transfers the same rights or interest twice to two different assignees. The first assignee is generally given priority over the subsequent assignee, unless the assignment contract with the first assignee is revocable and non-enforceable. The subsequent assignee is also given priority in cases where the subsequent assignee had in good-faith given the consideration for the assignment contract and had no knowledge of the assignment contract with the first assignee. 

In these cases, subsequent assignees can sue the obligor in order to fulfill their obligation in the contract. The States follow different rules of laws relating to successive rights in an assignment contract. In some state laws, the person who has given the notice of assignment to the obligor is considered as first assignee, irrespective of the order in which the assignments in a contract was made.

Warranties guaranteed by the assignor 

The assignor has some legal duties in assigning the rights of the contract to the assignee. In order to fulfill those duties, the assignee is warranted by the assignor in contract of assignment. An example of a warranty is that the assignor has the full right and capacity to transfer their rights or benefits in the contract to the assignee for fulfillment of assignment in the contract. The assignor cannot guarantee the following in the assignment contract: a) consideration or benefits that is to be received from an obligor of the contract; and b) mere appearance of an obligor willing to perform the contractual obligations shall fulfill or perform their duties in the contract. 

Sale of right of holder-in due course in negotiable instrument

The holder of a negotiable instrument has explicit rights and interests over the negotiable instrument. Such rights or interests cannot be transferred to the assignee by the holder in due course through assignment in the contract. Therefore, sale of negotiable instruments by the holder in due course is not allowed, as mentioned in Section 302 of Article 3 of the Uniform Commercial Code which contains laws governing negotiable instruments.

Rule of waiver 

There must exist certain types of defenses available to the obligor in the contract of assignment. While the waiver of defenses is more advantageous to the obligee or the assignor in the contract but imposes risk or burden to the right of the obligor in the original contract if the obligor agrees in the original contract for not raising the defenses against the assignee that could have been raised against the assignor. 

An example of such a circumstance is when a person or an entity buys a certain product for some consideration and, afterward, the product is found to be damaged. In these cases, certain defenses should be available to the obligor where there is no fault of the obligor who has performed the obligation of contract in good-faith and subsequently received the damaged product due to the fault of the obligee in the contract. 

The importance of defenses of obligor against the assignor and the assignee has been highlighted broadly in the Uniform Commercial Code relating to consumer transactions, where waivers of such defenses have been declared ineffective by the state laws in such consumer transactions. Further, the Federal Trade Commission regulation also does not allow the waiver of defenses against the seller or assignee of such seller by the buyer.

Delegation

What is meant by delegation in a contract

Delegation occurs when a party to a contract transfers one of their obligations to perform a specific contractual duty to another person to fulfill the purpose of the contract. In such types of third-party contracts, there are three parties involved, namely: 

• Delegator;
• delegatee; and 
• obligee. 

The delegator is the one who delegates the duty to be performed for the fulfillment of the contract to the delegatee and the delegatee is the individual or entity that assumes the responsibility to carry out certain duties of the contract on behalf of the delegator. In a contract of delegation, the obligor can delegate their duties in the contract, and the obligee in the contract is the one to whom such delegated duties are owed. 

For example, a company in the business of making paint hires several contractors to paint the house, or office, or any other property of the contractual party. Therefore, the company shall be the obligor in the original contract who has obligation to paint the property of the obligee for which the company hires contractors to paint the property, and those contractors shall be the delegatee to whom a particular duty has been conferred by the obligor. In such a contract, the obligor is not fully discharged from the responsibility of the contract and has the obligation to provide and manage all the services related to their product, wherein the contractor shall help the obligor to fulfill one of their services which includes painting the property of the obligee.

Assignment versus delegation

The concept of assignment in the contract is based on ownership where the assignee steps into the shoes of the assignee and owns the benefits of the contract, whereas in a contract of delegation, the delegatee does not become the owner as no ownership exists in the transferring of an obligation or duty of the contract. 

The delegatee can be discharged in the contract of delegation by the obligor only under the circumstances where novation of contract has taken place, such delegatee has been released by the obligor or due to circumstances of the contract of delegation. The obligor in the contract of delegation cannot transfer all the duties of the original contract to the delegatee unless the original contract specifically provides for the substitution of the duties of the obligor to the delegatee. 

In the contract of assignment, the assignor is discharged from the rights of the original contract once those rights or benefits of the contract is vested from the assignor to the assignee; whereas in the contract of delegation, the delegator is never fully discharged from the duties of the original contract and can confer the specific duty of the contract to the delegatee for the performance of the contract.

Exceptions related to delegation in a contract

There are certain contracts in which delegation of duty from the obligor to any other person is not permitted, and the obligor has to perform such duties explicitly in the contract without any help from any other person. Therefore, the duties in the contract of the delegation are allowed to transfer from the delegator to the delegatee, unless there are certain restrictions in the contract itself. The restriction might be related to the delegation of duty, or the contract of delegation is violating laws or statutes, or is against the public policy, or there is a  substantial interest of the contracting parties in personal performance of obligations by the obligor in the original contract. Such exceptions in delegation of contract are detailed as follows:

Contract involving personal service from the obligor

In a contract which involves the personal service to be rendered by the obligor as a part of their performance of duty in the contract, delegation is not required. In such contracts, the service is rendered by the obligor on the basis of their personal skills, which no person other than the obligor himself can perform. Therefore, in such types of contracts, the obligor is not allowed to delegate their duties to the delegatee in the contract. 

For example, Andrew is a dancer and is requested by a restaurant owner to render their service for the restaurant. Here, Andrew is obligated to render a service based on his personal skills, which he cannot further delegate to another person for the performance of the contract. 

Contract against public policy

There are certain contracts in which delegation of duty by the obligor shall be considered against the law, statute, or public policy. For example, any public official in the government is not allowed to delegate duties to any private citizen. Such duties are assigned to the public officer in an official capacity, which further cannot be delegated to any other person, especially private citizens. There exist special circumstances where certain parts of the duty can be delegated by the public officer to their subordinates or assistants in the office.

Contract prohibiting delegation

The contract of delegation cannot be performed in any contract which itself bars or any circumstances surrounding the contract bars the delegation of duties from the obligor to any other person. This rule has been further described in Sections 2 to 210(3) of Article 2 of Uniform Commercial Code, which state that in a contract for the sale of goods, if there is a bar on assignment of contract rights then such bar shall also be construed as a bar on the delegation of the duties in the same contract.  

Case laws related to third parties to a contract

Lawrence v. Fox (1859) 

Facts 

In this case, an individual named Holly entered into a contract with Fox in which he lent Fox $300 and was indebted to a person named Lawrence for the same amount, due to which both of them agreed that Fox shall repay the loan amount directly to Lawrence. Fox failed to pay the loan amount to Lawrence, due to which Lawrence sued Fox to claim the loan amount. Fox denied the legal standing of Lawrence and argued that Lawrence was not party to the contract. 

Issue

Whether Lawrence is a party to a contract between Holly and Fox, and can these rights be created through the contract?

Judgment

The Court of Appeals of New York rejected the defenses given by Fox and said that parties to the contract have the power to create rights for third parties even when such contract does not include cases of agency or trust. The third party in such cases can enforce their rights and compel the performance of the obligations by the promisor for their benefit in the contract. Therefore, in this case, the court observed that Lawrence received benefit from the contract due to circumstances surrounding the contract in which Holly had to repay the same amount to Lawrence that he had given to the Fox. Lawrence was not directly involved in the contract, but the parties agreed to benefit Lawrence from their contract by agreeing that Fox shall pay the amount to Lawrence. Therefore, the court held that Lawrence has all rights to enforce their benefit through a contract as a creditor beneficiary in which he was not a party to and entitled to receive the loan amount from the Fox.

Seaver v. Ransom (1918)

Facts

In this case, a woman was dying and had the intention to bequeath a house to her niece. Her husband made a will in which such bequest was not included. She was too ill and signed this will after receiving a promise from his husband that he would include this bequest in his own will for her niece of an equivalent value. The husband died without making the bequest he had promised to his wife. The niece sued his estate to enforce the promise made by him to his wife. 

Issue

Whether the plaintiff can enforce this contract in the capacity of a donee beneficiary or not. Though she is not a party to it, it was made for her benefit.

Judgment

The Court of Appeals of New York gave judgment in the favor of plaintiff and held that the contract made between Mr. and Mrs. Benam for the benefit of the plaintiff which includes receiving a house after his husband’s death is a valid contract. The plaintiff has the right to enforce such contract in the capacity of a donee beneficiary, which further binds the estate to perform on such contract. Therefore, this contract is based on the general doctrine that any contract made for the benefit of a third party is enforceable by such third party. 

Speelman v. Pascal (1961)

Facts

In this case, Gabriel Pascal was a theatrical producer for many years, and died in 1954. In 1952, Gabriel Pascal entered into an agreement with English Public Trustee, where he was granted the exclusive rights to prepare and produce a musical play and motion version picture of that musical play. Before his death, Pascal made a contract with the plaintiff to provide her with a certain percentage of profits from his musical play production. The music was not written and produced until Pascal’s death. Pascal acquired the rights of the movie to produce the music during his lifetime, and he assigned a right to the plaintiff in the profit that shall be earned by such music in the future. 

Issue

1. Whether the plaintiff in the capacity of a donee beneficiary shall have the right to get a percentage of profit from a contract which is in existence, but the rights in such contract did not exist at the time of making such assignment; and 
2. whether such transfer of rights amounts to a valid assignment?

Judgment

The Court of Appeals of New York observed that a letter was written by Pascal to the plaintiff, which showed the intent of Pascal to transfer some amounts of profits earned from the contract of music production. In a contract where future rights were transferred, the contract was existent at the time of transfer, amounting to a valid assignment of rights to the plaintiff and the plaintiff can enforce the such contract after such future rights become effective. Therefore, the court held that the assignment was effective as soon as the music was produced, and the plaintiff is entitled to get their portion of profits from this assignment.

Zigas v. Superior Court (1981)

Facts

In this case, the plaintiff is the tenant of the building, which is financed by the federal government. The landlord of the building violated the contract by charging the rent above the maximum limit allowed by the United States Department of Housing and Urban Development. The plaintiff sued in the capacity of a third-party beneficiary in a contract between the landlord and the federal government. 

Issue

Whether the plaintiff has the legal standing to sue as a third-party beneficiary in this contract with the government?

Judgment

The Court of Appeal of California held that the sole purpose of this contract between the government and the landlord was to benefit the tenants by keeping the limit of the rent at a prescribed limit or reasonable level. The plaintiff has the right to claim an independent action to enforce the rent limitation. The court further held that the plaintiff is an intended beneficiary in this government contract because the intention of the contract includes providing benefits to the tenant by furnishing a suitable living environment and ensuring reasonable rent to be charged.

Sally Beauty Co., Inc v. Nexxus Products Co., Inc. (1986)

Facts

In this case, the Best Barber and Beauty Supply Co. was an exclusive distributor of Nexxus Products. The Best Barber assigned the exclusive distributorship to Sally, who was the competitor of Nexxus Products. Nexxus Products objected to the assignment of rights in the contract and argued that it cannot be assigned as the contract between the Best Barber and Nexxus Products is of personal service. 

Issue

Whether a contract assigned and delegated to a competitor of a contractual party is valid?

Judgment

The United States Court of Appeals for the Seventh Circuit held that the assignment of such a contract is not valid as such contract involves personal services or services of a special nature and the contract is of such a nature that it cannot be assigned to its direct competitor without obtaining the consent of the other party. Further, the court did find that delegation of duty to a competitor of Nexxus Product can impose a risk on Nexxus Product but the assignment of rights to Sally is valid and Sally will use its best effort in fulfilling its obligations and duties towards the Nexxus Products.

Julian v. Christopher (1990)

Facts

In this case, the plaintiff is a landlord who has given his property on a lease to the tenant and in that lease prevented the tenant from further sub-letting the property without the landlord’s permission. The tenant wishes to sub-let the property and ask for permission from the landlord. The landlord denied the permission as the tenant was not willing to pay extra money which the landlord was desiring in return for such a sublet of property. The tenant sublets the property without the permission of the landlord, and the landlord sues the tenant for repossession of the property. 

Issue

Whether the landlord justified in not letting the tenant sublet the property and whether he should get the possession back from the tenant in this case?

Judgment

The Court of Appeals of Maryland observed that the landlord included a clause in their lease agreement prohibiting further sub-letting the property by the tenant without his permission, through which the landlord is obliged to be reasonable while refusing such permission to the tenant. The court held that the landlord cannot refuse the permission unless he shows that the sub-letting of his property causes any risk or burden to him or his property or would affect his rights in the contract. If the landlord wishes that the tenant should not sublet the property, he should refute in clause for sub-letting that such a tenant is not allowed to sublet the property. Therefore, the landlord’s case was dismissed, as he was not justified in refusing the permission for sub-letting to the tenant. 

Klamath Water Users Protective v. Patterson (1999)

Facts

In this case, the plaintiffs were irrigators who claimed that they were intended beneficiaries of the contract of agency between the government and a power company for the management of a dam. They further argued that they have the independent right to enforce such a contract in which the power company has an obligation to maintain the flow levels. 

Issue

Whether private citizens can claim an independent action as a beneficiary from a government contract?

Judgment

The United States Court of Appeals, Ninth Circuit observed that one of the duties of the government in the contract was to the irrigators, but the government contract was not made with the intention to provide benefit to the irrigators. The court held that the plaintiff could not claim an independent action from the government contract because such a contract was not made to benefit the plaintiff. The court further held that the government’s duty in the contract of irrigation water creates the right of the plaintiff in such a contract as an incidental beneficiary and not as an intended beneficiary. Therefore, the plaintiff has no right to enforce such contracts where they have been provided benefit in the capacity of incidental beneficiary.

Martis v. Grinnell Mutual Reinsurance Company (2009)

Facts

In this case, Grinnell is an insurance company contracted with the Water Management Corporation to provide insurance against any injury to the workers of the Water Management Corporation. The insurance policy by the insurance company contains a clause that the insurer shall be directly and primarily liable to any person entitled to receive benefits from such insurance. Martis was a chiropractor who had provided medical services to one of the employees of the Water Management Corporation who are insured by the Grinnell. Martis filed a class action against Grinnell for improperly applying a discount to the payment made to the medical providers and further argued that medical providers are the intended beneficiary of a contract for insurance between the insurance company and the insured employees of the Water Management Corporation. 

Issue 

Whether the plaintiff shall be considered as an intended beneficiary in an insurance contract between the insurance company and the employees?

Judgment

The Appellate Court of Illinois observed the petition of the plaintiff and held that the plaintiff was not able to prove that medical providers were the intended beneficiaries of the policy. The clause related to “any person entitled to benefits” mentioned in the policy refers to the employees of the insured employer. Therefore, the court dismissed the petition of the plaintiff and held that such clauses in the insurance policy convey no intention to confer any independent right on the medical providers that the plaintiff claimed to be the intended beneficiaries.

Cianciotto v. Hospice Care Network (2011) 

Facts

In this case, the father of the plaintiff was not well, and he had entered into a contract with the Hospice under which the Hospice agreed to provide care to him continuously for six months. The hospice breached the contract with the father of the plaintiff and ended their services within a few weeks. The father was very ill and died as he was not provided proper care. The plaintiff sued the hospice after the death of his father for mental distress damages. The hospice argued that it has no contract with the plaintiff and plaintiff is not a party to a contract between the hospice and his father.

Issue

Can the plaintiff claim damages from the defendant for the breach of contract in which she was not party to the contract or not directly involved in the contract?

Judgment

The New York District Court observed the facts of the case, denied the arguments presented by the hospice and said that the plaintiff shall be the primary care provider to her father and such contract between her father and hospice had relieved her from the responsibility of giving him care during his illness. The court further held that in this contract the plaintiff is not a party to the contract but acts as an intended beneficiary because such a contract relieved her from the mental anguish of taking responsibility for her father. Therefore, the plaintiff is entitled to receive damages as an intended beneficiary for mental distress from the hospice due to breach of contract.

Conclusion 

The doctrine of third-party in a contract was not recognized in earlier times, even under circumstances where the contract was made with the intention of contractual parties willing to provide certain benefits to such third-party. In the United States, the laws governing the contracts were based on the principles of common law, which were further explained in the Restatement (Second) of Contracts and the Uniform Commercial Code. The contract laws are also mostly governed by private laws, which means the terms of the contract shall determine the rights and liabilities of the party involved. 

The third party has a significant legal standing in any contract even though they are not a party to a contract. The courts have recognized the legality of certain contracts in which the third parties have rights and liabilities in the contract and can enforce such rights by compelling performance from the contractual party in a contract. These third parties can claim these rights only when such a contract is made to provide benefits to such third-party otherwise, their status remains as incidental beneficiary who unintentionally got benefits through the contract. There are other conditions where such rights are transferred wholly or partly through assignment in the contract. 

The general rule in the contract law of the United States is that the third parties who are not the intended beneficiary or have not received any benefit through the assignment do not possess the right to compel the contractual parties to perform their obligations in the contract through which the third party shall receive the benefit in a contract. In addition, the contractual parties in a contract can also delegate a part of their contractual duties to the third party in which the third party has an obligation to fulfill such duty for the performance of the contract. 

Frequently asked questions (FAQs)

What do you mean by third-party in a contract? How can we identify a third party in any contract?

A third party in a contract means a person who is not made a party to the contract, but the contract was made either with the intention to benefit the third person or ultimately benefits the third person through the performance of the contract by the contractual parties. The common law recognizes three types of third-party in a contract, which include: 

a)Third-Party Beneficiary;

b) Assignee; and 

c) Delegatee.

How is a third-party beneficiary different from an assignment and a delegation?

A third-party beneficiary is an individual or an entity for whose benefit the original contract is formed and the rights or benefits become vested in that individual or an entity, once the contract is formed by the contractual party. In an assignment, an assignee acquires rights after the original contract is formed and the assignee’s rights become vested when the assignor in the contract wants to assign their contract benefits to the assignee. Further, in a delegation, a delegatee acquires a duty from the delegator after the contract is formed, and the delegatee shall assume such duty once the delegator transfers such duty to the delegatee after the formation of the contract. 

What is the difference between the intended beneficiary and the incidental beneficiary?

An intended beneficiary is someone who gets the direct benefit due to the formation of a contract, whereas an incidental beneficiary is one who gets benefits indirectly due to such formation of the contract. The main difference between both of these beneficiaries is that in an intended beneficiary, the contractual parties have an intention and pay consideration to benefit such beneficiary whereas in an incidental beneficiary, the contractual party does not intend to benefit such beneficiaries, but they get benefits due to circumstances involving such contract. The proof of such intention and consideration for an intended beneficiary can be seen when the contractual party specifies the name of such beneficiary in the original contract. These types of beneficiaries have entire rights to compel the performance of a contract for their benefit. 

Further, the incidental beneficiaries are not named in the contract and cannot compel the performance of the contract for their benefit. It is upon the contractual party to perform their original contract in any way which might benefit the incidental beneficiary, but they cannot claim it as a right from the contractual parties. 

Does the contract of delegation indirectly benefit the delegatee?

The contract of delegation involves transferring of duty from the delegator to the delegatee in a contract. In such a contract, the obligor in the original contract cannot transfer their entire obligations in the contract and instead just transfers a specific duty to the delegatee to carry out the performance in a contract. The delegatee gets indirect benefits from the contract of delegation when such delegatee assumes their responsibility and completes the duty delegated within the time specified in the contract or within a reasonable time for the performance of such duty.

References

• https://scholarship.law.tamu.edu/cgi/viewcontent.cgi?article=2358 context=facscholar
• https://repository.uclawsf.edu/cgi/viewcontent.cgi?article=1451&context=hastings_law_journal
• https://digitalcommons.law.uw.edu/cgi/viewcontent.cgi?article=4969 context=wlr
• https://www.forchellilaw.com/intended-vs-incidental-third-party-beneficiary-status/?utm_source=rss&utm_medium=rss&utm_campaign=intended-vs-incidental-third-party-beneficiary-status
• https://saylordotorg.github.io/text_legal-aspects-of-marketing-and-sales/s17-01-assignment-of-contract-rights.html
• https://saylordotorg.github.io/text_legal-aspects-of-marketing-and-sales/s17-02-delegation-of-duties.html
• https://www.hzu.edu.in/uploads/2020/10/97-contract-law-willan-publishing-2007.pdf
• https://www.nathancrystal.com/pdf/FileItem-40833-AmericanContractLawinaComparativePart1Perspective.pdf
• https://www.iicj.net/subscribersonly/15november/iicj5nov-contract-andrewtaylor-hesco-uk.pdf
• https://www.casebriefs.com/blog/law/contracts/contracts-study-buddy/examples-and-explanations-contracts-study-buddy/chapter-19-assignment-delegation-and-third-party-beneficiaries/assignment-delegation-and-third-party-beneficiaries/30/