Which term describes a contract in which a non-party is intended to receive a benefit from the agreement?

• A. Adhesion contract
• B. Third-Party beneficiary contract
• C. Unilateral contract
• D. Executed contract

Answer: (B)

In contract law, the key idea is whether a contract is designed to confer a benefit on someone who isn’t a party to the agreement. When a contract intends to benefit a non-party, the relationship is described as a third-party beneficiary contract. A classic example is a life insurance policy: the insured and insurer form the contract, but the named beneficiary—who isn’t a party to that contract—is the intended recipient of the policy proceeds. This distinguishes the arrangement from adhesion contracts (standard-form, offered on a take-it-or-leave-it basis), unilateral contracts (one party promises in exchange for performance), and executed contracts (fully performed). Therefore, the term that fits is third-party beneficiary contract.