Also known as: incidental third party beneficiary · incidental third-party beneficiaries · incidental third party beneficiaries · incidental beneficiary
Written by attorneys · grounded in primary & secondary sources — see below
A third party who receives a benefit from contractual performance but lacks any enforceable right against the promisor or promisee. Recognition of such a right is not appropriate to effectuate the parties' intention because the benefit is merely a byproduct of the agreement rather than its object.
Igor Ito hired Inertia Dynamics to renovate his warehouse. The work raised property values on the adjacent block. Idris Ives, whose building stood next door, noticed the increase but could not sue either party when the contractor delayed completion.
Infinity Bank contracted with a labor union to avoid strikes at member firms for one year. Imperial Motors, a parts supplier to one member, lost sales when a strike occurred anyway. Imperial Motors held no claim against the bank or the union for the lost revenue.
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An incidental beneficiary receives only a collateral advantage from performance and acquires no enforcement rights. An intended beneficiary is one for whom recognition of a right to performance is appropriate to carry out the parties' manifested intention under the two-part test of Restatement § 302(1).
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No. The beneficiary acquires by virtue of the promise no right against the promisor or the promisee, so any suit is properly dismissed for lack of standing.
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The contract does not name the third party, the performance does not discharge any obligation owed to that party, and the agreement contains an integration clause limiting enforcement to the signatories. These factors indicate the benefit is secondary rather than the object of the promise.
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Naming alone is not conclusive. The decisive inquiry remains whether recognition of a right in the named party is appropriate to effectuate the parties' intention. If the contract expressly reserves enforcement to the promisee and contains an integration clause, the named party may still be treated as incidental.
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