An intended third-party beneficiary arises when

• A. The promise is intended to benefit the promisee’s own interests
• B. Performance will satisfy an obligation to pay money to the beneficiary or circumstances indicate the promisee intends to confer the benefit
• C. The benefit is incidental and not intended by the parties
• D. The beneficiary cannot sue the promisor

Answer: (B)

In contract law, a third-party beneficiary arises when the promisor’s promise is intended to benefit someone other than the promisee. The key test is twofold: either the promisee’s performance will satisfy an obligation to pay money to the beneficiary, or the circumstances show that the promisee intends to confer the benefit on the beneficiary. When either of these is true, the third party has rights to enforce the promise against the promisor.

This is why the correct choice is that the promise will satisfy a debt to the beneficiary or the promisee’s intent to confer the benefit is shown by the circumstances. If the promisee’s aim is their own interest, there’s no third-party beneficiary. If the benefit is incidental, the third party cannot sue.