A person who is not a party to a contract but who benefits from it and has a legal right to enforce the contract if it is breached by either of the contracting parties.

• A. Third-party beneficiary
• B. Breach of contract
• C. Bilateral contract
• D. Contract

Answer: (A)

This question tests understanding of a third-party beneficiary. When a contract is made between two parties with the promise to confer a benefit on someone who isn’t a signatory, that person may have enforceable rights if the contract is breached—provided the contract intends to benefit them. Such a person is called a third-party beneficiary, specifically an intended beneficiary, whose rights arise from the contract itself. They can sue to enforce the promised performance or seek damages if either party fails to fulfill the contract terms. This distinguishes them from incidental beneficiaries, who have no enforceable rights. The other options don’t fit because a breach of contract is the act of failing to perform, a bilateral contract is a type of agreement between two parties where both promise to perform, and a contract is the overall agreement itself between the actual parties.