If a third party will be affected by a contract, the parties to the contract are in privity with the third party.

Question

Quizplus · Accepted Answer

The statement is incorrect. If a third party will be affected by a contract, but is not explicitly named or intended as a beneficiary, then the parties to the contract are not in privity with the third party. The third party may have rights or claims against one or both parties under other legal theories, such as tort or statute, but not under the contract itself. However, if the parties to the contract intend for the third party to have enforceable rights under the contract, they can create a third-party beneficiary contract or assign the rights to the third party.

If a Third Party Will Be Affected by a Contract