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third-party beneficiary principle

The third-party beneficiary principal is a legal concept that allows a third party to sue to enforce a contract to which it is not a party if the contracting parties intended to benefit the third party at the time the contract was executed.

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Third parties can file actions to enforce a contract only when they can demonstrate that the contracting parties intended to confer upon them a direct benefit. If the intent is lacking, the court will likely rule that the plaintiff is merely an "incidental beneficiary" with no legal cause of action on the contract. Examples of where an intended benefit has been found by a court include condominium purchasers who relied on the architectural design provided by an architect to the developer, a project owner who relied on information provided by a project architect's consultant, and homeowners who sued for the completion of roads as stipulated in a contract between the developer and the city.