Also known as: incidental beneficiaries
Written by attorneys · grounded in primary & secondary sources — see below
A beneficiary of a contractual promise who is not an intended beneficiary. Recognition of an enforcement right in such a beneficiary is not appropriate to effectuate the intention of the parties. An incidental beneficiary acquires by virtue of the promise no right against the promisor or the promisee.
Rich contracts with Erwin to paint Rich's house for $1,000. Paula owns the neighboring property. Completion of the painting increases the value of Paula's land. Paula has no right to enforce the contract against either Rich or Erwin.
C contracts with A to erect a building. B then contracts with A to supply lumber for the building. C sues B for breach of the supply contract. C has no right to enforce B's promise because C is merely an incidental beneficiary.
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An incidental beneficiary receives a benefit from contractual performance but lacks any enforcement right because recognition of such a right is not appropriate to effectuate the parties' intention. An intended beneficiary, by contrast, may enforce the promise when the performance satisfies an obligation of the promisee to pay money or when circumstances indicate the promisee intends to give the beneficiary the benefit of performance.
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No. An incidental beneficiary acquires by virtue of the promise no right against the promisor or the promisee. Only intended beneficiaries may enforce contractual duties.
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No. Performance of a contract will often benefit a third person, but unless that person is an intended beneficiary no duty to the third person is created. Examples include a neighbor whose property value rises when a house is painted or a manufacturer whose goods are purchased under a contract between others.
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The promisee's manifested intention controls. When the promisee intends to satisfy a money obligation owed to the third party or to confer the performance benefit directly on that party, the third party is intended. Absent such intention the third party remains incidental even if benefited.
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