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Simple English definitions for legal terms
intended beneficiary
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A quick definition of intended beneficiary:
An intended beneficiary is someone who is not a part of a contract but is meant to benefit from it. This happens when two parties make an agreement and one of them promises to do something that will help the third party. The third party is called the intended beneficiary because the two parties intended to benefit them. This is different from a donee beneficiary, who is someone who benefits from a contract but was not intended to do so.
A more thorough explanation:
An intended beneficiary is a third party who is intended to benefit from a contract between two parties. This means that the two parties involved in the contract have specifically included the third party as a beneficiary and have provided consideration to ensure that the other party performs in a way that benefits the intended beneficiary.
- John hires a contractor to build a house for him. As part of the contract, John specifies that the house is being built for his daughter, Sarah, and that she is an intended beneficiary of the contract. The contractor agrees to build the house in a way that benefits Sarah, and John provides consideration to ensure that the contractor performs. In this case, Sarah is an intended beneficiary.
- ABC Company enters into a contract with XYZ Company to provide goods. As part of the contract, ABC specifies that the goods are being provided for a specific customer, and that the customer is an intended beneficiary of the contract. XYZ agrees to provide the goods in a way that benefits the customer, and ABC provides consideration to ensure that XYZ performs. In this case, the customer is an intended beneficiary.
These examples illustrate the concept of an intended beneficiary, where a third party is specifically included in a contract and is intended to benefit from it. The two parties involved in the contract provide consideration to ensure that the other party performs in a way that benefits the intended beneficiary.