Multistate Bar (MBE) OPE 2 Practice Exam

When a contract is formed, the usual privity rule has expanded to let certain third parties sue to enforce promises made for their benefit. The key distinction is between intended beneficiaries and incidental beneficiaries. If the contract is intended to benefit a third party—either as a creditor beneficiary (the promisor owes money to the third party) or as a donee beneficiary (the promisee intends to confer a benefit on the third party)—that third party can sue the promisor for breach even though there’s no contract between them and the promisor. If the third party is only incidental to the contract, they cannot sue. Novation isn’t required for this right to arise; novation would substitute a new party in place of an original one, which is a separate concept. The take-away is that modern contract law recognizes standing for certain third-party beneficiaries to enforce the contract, so rights have expanded to allow those beneficiaries to sue.