When people think of contracts, they assume that only two parties are involved. However, contract law is not always so simple. There may be other parties who benefit from the performance of a contract and may be violated by its breach. The external party is called the “third party beneficiary”. [1] 1) Identified in the contract: All our examples indicate cases where third party beneficiaries have been mentioned in the contract. Bob has been identified by the parties in our snow shovel cases and the beneficiary of a life insurance contract is named in the agreement (although it can usually be amended later)[5] In addition to the fact that the contract becomes enforceable with the acquisition for the third party, the time of acquisition is important for another reason. Before the rights of the third party beneficiary are transferred, the original parties may modify their contract at their own discretion. Once the rights have been acquired, the original parties may not exercise or modify the contractual rights without the consent of the beneficiary to change the contractual rights. [8] Contracts are binding obligations imposed on the parties who entered into the agreement.

The law applies the obligations when necessary, and once a party has performed the contract, it is an obligation that is imposed, whether the party changes its mind or not. A party who violates a contract is considered to be in breach of contract and the other party may seek damages caused by the breach. In order for the rights of third parties to arise, certain contractual criteria must be met in order to prove a performance object: the difference between a creditor beneficiary and a beneficiary becomes important when the parties try to modify the rights of the third party beneficiary. The promisor and the promisor have neither the right nor the authority to modify the acquired rights of the beneficiary without consent, unless this power has been expressly reserved in the contract, whether or not the recipient is aware of the contract. The rights of a beneficiary take effect when the contract is concluded in his favour, whether or not he is aware of the contract. On the other hand, the rights of a beneficiary creditor are transferred only if the creditor becomes aware of the contract and accepts it. If the third party beneficiary has rights under the contract, those rights generally include all rights that exist under the contract document. For example, our office successfully argued before the California Court of Appeals that an arbitration clause in the contract could be enforced by the third-party beneficiary of the contract. The third party beneficiary follows in the footsteps of the party who wishes to benefit the third party. A third party beneficiary does not always have the right to take legal action every time a contract is concluded that is intended to benefit him. His right to take legal action on the basis of the contract will be transferred if he relies on or accepts the relationship that arises from the agreement.

In this case, the third party may sue the natural or legal persons who concluded the initial contract and did not comply with it. Even if a third party is not really a party to the contract, he can still benefit from the execution of the contract. Certain standards must be met for a third party beneficiary to have the legal rights to perform a contract. The Contracting Parties are the main beneficiaries. In general, persons who are not parties to the contract do not have the right to perform the contract or to obtain damages for breach of contract. However, there are exceptions to this rule. It is possible that third parties have rights in a contract. A third party beneficiary may have rights under a contract if the original parties intend that the agreement benefits the third party and that intention is demonstrated in the agreement. This may be done at the time of the contract, or a third party may also acquire rights to a contract that has already been performed if one of the parties actually transfers those rights to the third party. A third party beneficiary acquires a right of action to assert its performance only when he has accepted the service provided for in the contract. However, according to the South African interpretation, the third party beneficiary has only one expense or expectation before the benefit is formally accepted; in other words, he does not have the right to accept, but a simple competence. [3] Acceptance may also be a condition precedent in some contracts.

Under Scottish law, acceptance is not necessary to obtain a right of action, but is necessary to be liable. However, before acceptance, the ius quaesitum tertio is poor, so the acceptance of an advantage does not create a right, but consolidates that right. .