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Legal Memorandum: Third-party Beneficiary Requirements

Issue: According to the rulings of the Third Circuit, when is a person a proper third-party beneficiary?

Area of Law: Business Organizations & Contracts, Litigation & Procedure
Keywords: Third-party beneficiary; Test for determining; Contracts
Jurisdiction: Federal
Cited Cases: 269 F.3d 187
Cited Statutes: None
Date: 05/01/2005

The test for determining whether a party has intended third-party benefit status requires more than a statement within the four corners of the document to that effect.

[T]o qualify as a third party beneficiary of a contract, (a) the contracting parties must have intended that the third party beneficiary benefit from the contract, (b) the benefit must have been intended as a gift or in satisfaction of a pre-existing obligation to that person, and (c) the intent to benefit the third party must be a material part of the parties’ purpose in entering into the contract

E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, S.A., 269 F.3d 187, 196 (3d Cir. 2001) (emphasis added).

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