Who is considered a third-party beneficiary?

The concept of a third-party beneficiary in contract law refers specifically to a non-party who is intended to benefit from a contract made by two other parties. This means that while the third party is not directly involved in the contract itself, the provisions of the contract are designed to confer a benefit upon them. For example, if two individuals enter into a contract that stipulates a payment to a charity, that charity is a third-party beneficiary because they did not sign the contract but will receive a benefit from it.

In contrast, a party who signed the contract is directly involved and has rights and obligations stemming from the agreement, which does not fit the definition of a third-party beneficiary. A lawyer representing one of the parties is acting as an agent for a contracting party rather than being a beneficiary themselves. Similarly, a judge adjudicating a dispute is involved in the legal process rather than benefitting from the contract in any way. Thus, the essence of the third-party beneficiary role uniquely identifies individuals or entities who stand to gain from a contract, despite not being a direct party to it.