Under contract law, a third party who is an intended beneficiary may sue to enforce the contract. Is that true?

• A. Yes, if the third party is an intended beneficiary.
• B. Yes, regardless of intent or status.
• C. No, third parties cannot sue on contracts.
• D. Only if the contract is in writing.

Answer: (A)

Intended beneficiaries can sue to enforce a contract because the promisor promised to perform for the benefit of the third party, not merely for the promisee. When the parties intend to confer rights on that third party and those rights vest, the beneficiary has the right to enforce the contract or seek damages for breach. Incidental beneficiaries do not have enforceable rights, so only those who were intended to benefit can sue. The ability to sue does not depend on the contract being in writing, nor on privity between the third party and the contracting parties; the crucial factor is the promisee’s and promisor’s intent to benefit the third party. Therefore, the statement is true if the third party is an intended beneficiary.