Third party agreements are legal agreements between a third party and two named parties, which can designate responsibility for fulfilling the contract or indicate benefits for a non-signatory. Banks are common third parties, and securities law often involves third-party beneficiaries.
Contracts are usually agreements between two named parties. Third party agreement is a legal term that refers to a party added to a contract, between the other two parties. Unlike the two main contracting parties, a third party may not be named in the document. This type of agreement can come in many forms and the details of the agreement depend on the contractual situation.
When the assignment of who is responsible for performing the contract is in question, a third-party agreement often designates the party who will assume the duties or obligations of a signatory to the contract, should the signatory be unable to meet the terms. This type of third-party agreement not only allows for the transfer of duty to fulfill the contract, but also gives the third party all the rights granted to the original contract signer. In most cases, a clause is also included to indicate the circumstances that could cause the original signatory’s responsibilities and rights to be transferred to a third party.
Sometimes, a third-party agreement is created to indicate that performance of the agreement will benefit a person who did not sign the contact. Benefits for third parties are usually included in and excluded from contracts, unless one of the signatories wants to designate a specific benefit for a specific third party. To be able to enforce the contract, a third party must be able to demonstrate that the contract was drawn up for their benefit. Otherwise, the benefit is considered incidental and the contract is enforceable only by the original signatories.
Banks are common third parties because many contracts involve payments and banks hold the funds for the payment, which includes the bank as an unnamed third party agreement. The contract signatories bank name and payment method are usually withheld from the contract because banks have an obligation to pay when the institution receives a properly drawn check and the person’s account has sufficient funds to cover it. Insufficient funds or improperly drawn checks are still the responsibility of the signatory, not the third-party bank.
Third party agreements are an important part of securities law. In business, the term “securities” refers to stocks, bonds and similar forms of investment. Under the security law, typically only third-party non-customers sue the security release business. This is because the people who buy and hold the securities are actually third-party beneficiaries in contractual arrangements between the securities-issuing business and the investment banker who facilitate the sale of the security.
Protect your devices with Threat Protection by NordVPN
