Union Bank lent $200,000 to Wagner.Union required Wagner to obtain a life insurance policy naming Union as beneficiary.While the loan was outstanding,Wagner stopped paying the premiums on the policy.Union paid the premiums,adding the amounts paid to Wagner's loan.Wagner died and the insurance company refused to pay the policy proceeds to Union.Union may:
A)recover the policy proceeds because it is a creditor beneficiary.
B)recover the policy proceeds because it is an incidental beneficiary.
C)not recover the policy proceeds because it is not in privity of contract with the insurance company.
D)not recover the policy proceeds because one cannot claim insurance for oneself.

Question

Quizplus · Accepted Answer

If the promisor's performance is intended to satisfy a legal duty that the promisee owes to a third party,the third party is a creditor beneficiary.The creditor beneficiary has rights against both the promisee (because of the original obligation)and the promisor.Union is the intended beneficiary in the contract with Wagner and has the right to recover the money from the insurance company.

Union Bank Lent $200,000 to Wagner