An example of a third-party beneficiary under contract law includes a bank having a large loan with a client which requires an audit as part of the loan agreement. In these cases, though the contract for the audit engagement is between the auditor and the client, both the auditor and the client are aware that the bank will be relying on the audited financial statements.

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The bank is a third-party beneficiary under contract law because even though they are not a party to the contract between the auditor and the client, they will benefit from the contract and have legal rights to enforce it.

An Example of a Third-Party Beneficiary Under Contract Law Includes