What is an incidental beneficiary?

An incidental beneficiary is essentially a third party who receives some benefit from a contract, even though the contract was not specifically intended to confer benefits to them. This status means that while the incidental beneficiary may gain advantages, such as financial benefits or services, their benefit arises purely as a byproduct of the contract, rather than from any intentional provision made by the contracting parties.

In contrast, a party directly involved in the contract negotiations possesses rights and obligations as dictated by the agreement. Specific contractual rights are reserved for intended beneficiaries, who are purposefully included in the contract to receive benefits. Additionally, participants entitled to enforce contractual duties are typically identified parties with enforceable rights, ensuring that they can compel performance under the contract. Incidental beneficiaries lack this enforceability, which further clarifies their distinct role.