Who is a "third-party beneficiary"?

A "third-party beneficiary" refers specifically to a person who stands to benefit from a contract made between two other parties. This category is significant in contract law because it acknowledges that while the third party is not directly involved in the agreement or the negotiation process, they still gain advantages from the contract’s execution.

For example, if one party contracts with another to deliver goods, and a third party is named as the recipient of those goods, that third party has a stake in the performance of the contract even though they did not participate in its formulation. Their ability to enforce the contract or claim benefits varies based on the intent of the original parties and the nature of the contract itself.

While it is true that a third-party beneficiary is not involved in the contract negotiations, the defining characteristic is the beneficial aspect of their relationship to the contract's execution. Therefore, the correct choice captures the essence of who a third-party beneficiary truly is, highlighting both their indirect involvement and the benefit they receive from the agreement.