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Third-Party Beneficiaries

Description: This quiz covers the concept of third-party beneficiaries in contract law, including their rights, remedies, and defenses.
Number of Questions: 14
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Tags: contract law third-party beneficiaries
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What is a third-party beneficiary in a contract?

  1. A person who is not a party to the contract but who receives a benefit from it.

  2. A person who is a party to the contract but who does not receive a benefit from it.

  3. A person who is not a party to the contract but who is harmed by it.

  4. A person who is a party to the contract and who is harmed by it.

Show answer
Correct Option: A
Explanation:

A third-party beneficiary is a person who is not a party to a contract but who receives a benefit from it. This benefit can be anything of value, such as money, property, or services.

What are the two main types of third-party beneficiaries?

  1. Intended beneficiaries and incidental beneficiaries.

  2. Direct beneficiaries and indirect beneficiaries.

  3. Primary beneficiaries and secondary beneficiaries.

  4. Vested beneficiaries and contingent beneficiaries.

Show answer
Correct Option: A
Explanation:

The two main types of third-party beneficiaries are intended beneficiaries and incidental beneficiaries. Intended beneficiaries are those who the parties to the contract intended to benefit from the contract. Incidental beneficiaries are those who receive a benefit from the contract but who were not intended to benefit from it.

What rights do intended third-party beneficiaries have?

  1. The right to enforce the contract.

  2. The right to sue for breach of contract.

  3. The right to receive the benefit of the contract.

  4. All of the above.

Show answer
Correct Option: D
Explanation:

Intended third-party beneficiaries have the right to enforce the contract, the right to sue for breach of contract, and the right to receive the benefit of the contract.

What defenses can a promisor assert against an intended third-party beneficiary?

  1. The defense of lack of privity.

  2. The defense of impossibility.

  3. The defense of frustration of purpose.

  4. All of the above.

Show answer
Correct Option: D
Explanation:

A promisor can assert the defense of lack of privity, the defense of impossibility, and the defense of frustration of purpose against an intended third-party beneficiary.

What is the doctrine of promissory estoppel?

  1. A doctrine that prevents a promisor from revoking a promise that has been relied upon by a third party.

  2. A doctrine that allows a third party to enforce a contract even if they are not a party to the contract.

  3. A doctrine that imposes a duty on a promisor to disclose all material facts to a third party.

  4. A doctrine that allows a third party to recover damages from a promisor for breach of contract.

Show answer
Correct Option: A
Explanation:

The doctrine of promissory estoppel prevents a promisor from revoking a promise that has been relied upon by a third party. This doctrine is based on the principle that it would be unfair to allow a promisor to make a promise that they know will be relied upon by a third party and then later revoke that promise.

What are the elements of a promissory estoppel claim?

  1. A promise, reliance on the promise, and a detriment suffered as a result of the reliance.

  2. A promise, a benefit conferred on the promisor, and a detriment suffered by the promisee.

  3. A promise, a duty to disclose, and a breach of that duty.

  4. A promise, a misrepresentation, and a reliance on the misrepresentation.

Show answer
Correct Option: A
Explanation:

The elements of a promissory estoppel claim are a promise, reliance on the promise, and a detriment suffered as a result of the reliance.

What is the difference between a third-party beneficiary and an assignee?

  1. A third-party beneficiary is a person who receives a benefit from a contract, while an assignee is a person who takes over the rights and obligations of a party to a contract.

  2. A third-party beneficiary is a person who is not a party to a contract, while an assignee is a person who is a party to a contract.

  3. A third-party beneficiary is a person who is harmed by a contract, while an assignee is a person who benefits from a contract.

  4. A third-party beneficiary is a person who is not a party to a contract and who is harmed by it, while an assignee is a person who is a party to a contract and who benefits from it.

Show answer
Correct Option: A
Explanation:

A third-party beneficiary is a person who receives a benefit from a contract, while an assignee is a person who takes over the rights and obligations of a party to a contract. Assignees are typically parties to the contract, while third-party beneficiaries are not.

Can a third-party beneficiary enforce a contract?

  1. Yes, if they are an intended beneficiary.

  2. Yes, if they are an incidental beneficiary.

  3. No, third-party beneficiaries cannot enforce contracts.

  4. It depends on the jurisdiction.

Show answer
Correct Option: A
Explanation:

Intended third-party beneficiaries can enforce a contract, but incidental third-party beneficiaries cannot. This is because intended third-party beneficiaries are parties to the contract, while incidental third-party beneficiaries are not.

What is the difference between a third-party beneficiary and a creditor beneficiary?

  1. A third-party beneficiary is a person who receives a benefit from a contract, while a creditor beneficiary is a person who is owed money under a contract.

  2. A third-party beneficiary is a person who is not a party to a contract, while a creditor beneficiary is a person who is a party to a contract.

  3. A third-party beneficiary is a person who is harmed by a contract, while a creditor beneficiary is a person who benefits from a contract.

  4. A third-party beneficiary is a person who is not a party to a contract and who is harmed by it, while a creditor beneficiary is a person who is a party to a contract and who benefits from it.

Show answer
Correct Option: A
Explanation:

A third-party beneficiary is a person who receives a benefit from a contract, while a creditor beneficiary is a person who is owed money under a contract. Creditor beneficiaries are typically parties to the contract, while third-party beneficiaries are not.

What is the difference between a third-party beneficiary and a donee beneficiary?

  1. A third-party beneficiary is a person who receives a benefit from a contract, while a donee beneficiary is a person who receives a gift under a contract.

  2. A third-party beneficiary is a person who is not a party to a contract, while a donee beneficiary is a person who is a party to a contract.

  3. A third-party beneficiary is a person who is harmed by a contract, while a donee beneficiary is a person who benefits from a contract.

  4. A third-party beneficiary is a person who is not a party to a contract and who is harmed by it, while a donee beneficiary is a person who is a party to a contract and who benefits from it.

Show answer
Correct Option: A
Explanation:

A third-party beneficiary is a person who receives a benefit from a contract, while a donee beneficiary is a person who receives a gift under a contract. Donee beneficiaries are typically not parties to the contract, while third-party beneficiaries can be either parties to the contract or not.

What is the difference between a third-party beneficiary and a contingent beneficiary?

  1. A third-party beneficiary is a person who receives a benefit from a contract, while a contingent beneficiary is a person who receives a benefit from a contract only if a certain event occurs.

  2. A third-party beneficiary is a person who is not a party to a contract, while a contingent beneficiary is a person who is a party to a contract.

  3. A third-party beneficiary is a person who is harmed by a contract, while a contingent beneficiary is a person who benefits from a contract.

  4. A third-party beneficiary is a person who is not a party to a contract and who is harmed by it, while a contingent beneficiary is a person who is a party to a contract and who benefits from it.

Show answer
Correct Option: A
Explanation:

A third-party beneficiary is a person who receives a benefit from a contract, while a contingent beneficiary is a person who receives a benefit from a contract only if a certain event occurs. Contingent beneficiaries are typically not parties to the contract, while third-party beneficiaries can be either parties to the contract or not.

What is the difference between a third-party beneficiary and a vested beneficiary?

  1. A third-party beneficiary is a person who receives a benefit from a contract, while a vested beneficiary is a person who has a right to receive a benefit from a contract.

  2. A third-party beneficiary is a person who is not a party to a contract, while a vested beneficiary is a person who is a party to a contract.

  3. A third-party beneficiary is a person who is harmed by a contract, while a vested beneficiary is a person who benefits from a contract.

  4. A third-party beneficiary is a person who is not a party to a contract and who is harmed by it, while a vested beneficiary is a person who is a party to a contract and who benefits from it.

Show answer
Correct Option: A
Explanation:

A third-party beneficiary is a person who receives a benefit from a contract, while a vested beneficiary is a person who has a right to receive a benefit from a contract. Vested beneficiaries are typically parties to the contract, while third-party beneficiaries can be either parties to the contract or not.

What is the difference between a third-party beneficiary and a remainder beneficiary?

  1. A third-party beneficiary is a person who receives a benefit from a contract, while a remainder beneficiary is a person who receives a benefit from a trust.

  2. A third-party beneficiary is a person who is not a party to a contract, while a remainder beneficiary is a person who is a party to a contract.

  3. A third-party beneficiary is a person who is harmed by a contract, while a remainder beneficiary is a person who benefits from a contract.

  4. A third-party beneficiary is a person who is not a party to a contract and who is harmed by it, while a remainder beneficiary is a person who is a party to a contract and who benefits from it.

Show answer
Correct Option: A
Explanation:

A third-party beneficiary is a person who receives a benefit from a contract, while a remainder beneficiary is a person who receives a benefit from a trust. Remainder beneficiaries are typically not parties to the trust, while third-party beneficiaries can be either parties to the trust or not.

What is the difference between a third-party beneficiary and a reversionary beneficiary?

  1. A third-party beneficiary is a person who receives a benefit from a contract, while a reversionary beneficiary is a person who receives a benefit from a life estate.

  2. A third-party beneficiary is a person who is not a party to a contract, while a reversionary beneficiary is a person who is a party to a contract.

  3. A third-party beneficiary is a person who is harmed by a contract, while a reversionary beneficiary is a person who benefits from a contract.

  4. A third-party beneficiary is a person who is not a party to a contract and who is harmed by it, while a reversionary beneficiary is a person who is a party to a contract and who benefits from it.

Show answer
Correct Option: A
Explanation:

A third-party beneficiary is a person who receives a benefit from a contract, while a reversionary beneficiary is a person who receives a benefit from a life estate. Reversionary beneficiaries are typically not parties to the life estate, while third-party beneficiaries can be either parties to the life estate or not.

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