A painter enters into a contract with a homeowner to paint the exterior of the homeowner's house, which is adjacent to the neighbor's property. The painter breaches the contract and leaves the job unfinished. The neighbor, who stood to benefit from the painting because it could increase the value of their own property, files a lawsuit against the painter, claiming breach of contract. Can the neighbor enforce the contract?
Yes, because the neighbor stood to gain an economic benefit from the completion of the painting.
No, because the neighbor was not a party to the contract and thus cannot assert rights under the agreement.
Yes, because the contract created a benefit foreseeable to the neighbor, making them a third-party beneficiary.
No, because the neighbor is an incidental beneficiary and not an intended beneficiary of the contract.
The key issue is whether the neighbor qualifies as an intended third-party beneficiary of the contract between the painter and the homeowner. An intended third-party beneficiary has enforceable rights if the contract was intended to benefit them and the benefit is a central purpose of the contract. Here, the contract between the painter and the homeowner was most likely intended to benefit the homeowner by improving their house, not the neighbor. The neighbor, while incidentally benefitted, does not have enforceable rights.
Incorrect options are misleading because they either misunderstand the requirements for intended beneficiary status or incorrectly apply them. Incidental beneficiaries, who merely receive an unintended benefit from a contract, have no standing to enforce the agreement.
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What is the difference between an intended and incidental beneficiary?
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What criteria must be met for someone to be considered an intended beneficiary?
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Can an incidental beneficiary ever obtain rights under a contract?