A contract provides that one party will pay a specified amount directly to a named third party who is not part of the contract. The third party is an intended beneficiary. Who can enforce the contract?

• A. Only the original promisee and promisor can enforce the contract.
• B. The intended third-party beneficiary may enforce the contract.
• C. An incidental beneficiary may enforce the contract.
• D. No third party has enforceable rights in the contract.

Answer: (B)

The key idea here is that a contract can create enforceable rights for someone who is intended to benefit from it. When the agreement says one party will pay a specified amount directly to a named third party, the contract intends to confer a benefit on that person. Because the third party is intended to benefit, they have the right to enforce the promise against the promisor if the payment isn’t made.

An incidental beneficiary, by contrast, gains only as a byproduct of the contract and cannot sue to enforce it. The original promisee and promisor can enforce their agreement between themselves, but the crucial point is that the named, intended beneficiary also has enforceable rights.