Practice Quiz

CLEP Business Law

Category - Contracts

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Under what circumstances can third parties sue for damages for breach of contract?
  1. Third parties cannot sue, as they were not party to the contract.
  2. If the third party is a spouse, the spouse can sue for breach of contract.
  3. If the third party is an employee, the employee can sue for breach of contract.
  4. If the third party is an intended beneficiary to the contract, the third party can sue for breach of contract.
  5. If the third party is an unintended beneficiary to the contract, the third party can sue for breach of contract.
Explanation
Answer: D. Third parties can sue for damages for breach of contract if the third party is an intended beneficiary to the contract. A party does not have to be specifically named or identified in the contract to be an intended beneficiary. However, unintended third party beneficiaries cannot sue for damages for breach.
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