Promisee is liable to TPB only if TPB is a creditor beneficiary. Which option is correct?

Promisee is liable to TPB only if TPB is a creditor beneficiary. Which option is correct?

• A. True
• B. False
• C. Only if the promisee consents
• D. Only if the TPB is a creditor beneficiary

Answer: (D)

The key idea is how a third-party beneficiary’s rights depend on their status. A third-party beneficiary is someone who benefits from a contract between two other parties, and their ability to sue depends on whether they are an intended beneficiary. If the third party is a creditor beneficiary, the contract is understood to discharge or satisfy a debt owed to that third party, creating a direct link between the promisee and the third party. In that creditor-beneficiary setup, the obligation the promisee bears can be tied to satisfying the third party’s debt, so the third party can enforce the promise, and the promisee’s liability to the third party is triggered by that arrangement. If the third party is not a creditor beneficiary (e.g., a donee beneficiary or merely an incidental beneficiary), the promisee doesn’t have a direct obligation to pay the third party, and liability flows differently, typically to the promisor. Thus, the statement that the promisee is liable to the third-party beneficiary only when the TPB is a creditor beneficiary is correct.

The key idea is how a third-party beneficiary’s rights depend on their status. A third-party beneficiary is someone who benefits from a contract between two other parties, and their ability to sue depends on whether they are an intended beneficiary. If the third party is a creditor beneficiary, the contract is understood to discharge or satisfy a debt owed to that third party, creating a direct link between the promisee and the third party. In that creditor-beneficiary setup, the obligation the promisee bears can be tied to satisfying the third party’s debt, so the third party can enforce the promise, and the promisee’s liability to the third party is triggered by that arrangement. If the third party is not a creditor beneficiary (e.g., a donee beneficiary or merely an incidental beneficiary), the promisee doesn’t have a direct obligation to pay the third party, and liability flows differently, typically to the promisor.

Thus, the statement that the promisee is liable to the third-party beneficiary only when the TPB is a creditor beneficiary is correct.