Question

Ace contracted with Big City to train and employ handicapped, unemployed veterans residing in Big City. Ace breached the contract and Bell, a resident of Big City who is a handicapped, unemployed veteran, sued Ace for damages. Under the circumstances, Bell will

a. Lose, because Bell is merely an incidental beneficiary of the contract.

b. Win, because Bell is a third-party beneficiary entitled to enforce the contract.

c. Lose, because Big City did not assign its contract rights to Bell.

d. Win, because the intent of the contract was to confer a benefit on all handicapped, unemployed veterans residing in Big City

Answer 1

Generally in a contract third party beneficiary is covered under two categories namely

a)Intended beneficiary

b)Incidental beneficiary

Under incidental beneficiaries a person becomes an unintended third party beneficiary to the contract.So they have no legal right to sue on breaking up of a contract.

However,under intended beneficiaries a person benefits from the contract by acquiring rights under the contract.A third party beneficiary must be named as intended beneficiary of the contract.An intended beneficiary has legal right to sue.

In the case given Bell ,who is a handicapped,unemployed veteran residing in Big City will Win ,because the intent of the contract between Ace and Big City was to confer a benefit on all handicapped,unemployed veterans residing in Big City,thus giving Bell status of intended beneficiary.

Answer is option d.