The Third Party Rights Act also provides for certain conditions that allow a third party to challenge an existing contract. If the third party is designated as the beneficiary provided for in the contract, he has immediate access to his rights to contest the contract. However, for the third party to be considered as the intended beneficiary, it must meet two specific conditions: the granting of rights to third parties under a contract increases the risk of the contracting parties: they could be sued by any person who benefits from the contract. There are two types of third-party beneficiaries: a “planned or anticipated” beneficiary and a “incidental” beneficiary. In this scenario, a marketing company that has been hired to promote the app can be considered a third-party vendor. The existence of the right to perform the contract does not make the third party a contracting party. The third party only has the right to take legal action for the contract, to claim damages or an injunction as if he were a party to the contract. It may be provided in the agreement itself that no third-party beneficiaries are provided for in the contract and that all rights belong solely to the contracting parties. This simple solution was never considered by our client. But you can be sure that this clause is part of all the contracts he is signing.

If a non-contracting party receives direct benefits from the agreement, this is called an intended beneficiary. Essentially, this means that contracts create rights, obligations and responsibilities only with the parties who negotiated and signed the contract. The third-party beneficiary must be named or named in the contract and the intention to confer a benefit on that third party must be irrevocable. (Example: A father pays tuition and enrolls his son in university and signs the registration forms because his son is out of the country in the military. The son is the one mentioned as a student, but the father is the one who pays and enrolls him. The father dies. The son returns. As a third-party beneficiary, the son can apply for access to school.) A intended beneficiary is explicitly promised certain benefits in a contract, but is not yet a party to the contract. This type of assignment is effective by the third party against the person who is obligated to perform under the original contract, as long as the assignment does not alter the original obligations of that party. For example, a third party to whom an artist`s royalties have been assigned can sue the record company to collect those royalties if the company stops paying. In this scenario, the third party takes the place of the artist who was the original contracting party. However, the third party cannot change the terms of the original contract, so it cannot, for example, demand a higher royalty rate from the record company.

Under section 133 (1932) of the Restatement (First) of Contracts, there are three categories of third-party beneficiaries: Subject to clause 37.1 (Rights of Third Parties), a person who is not a party to this DPS Agreement shall not have the right to enforce any provision of this SPD Agreement under the PSRB, but this shall not affect any rights or remedies of anyone that exist or are available other than under the PSRB. There are two general types of third-party rights: assignments and designations of beneficiaries. Both involve the transfer of a right or benefit to a person who was not a party to the original contractual arrangement. Each jurisdiction has its own laws regarding the enforceability of third party rights. In principle, however, the rights of third parties may be exercised under certain conditions. This is usually whether the transfer is in writing, whether the party is aware of the agreement, whether the party changes its mind about the transfer before it takes place, and whether the transfer affects the non-assignor`s obligations. The rights of a third-party beneficiary are clearer if that person or entity is explicitly named in the contract. In such cases, a third-party beneficiary clause is added, identifying a person or company that expects to benefit from the agreement.