Under what condition can a third party enforce a term of a contract?

A third party can enforce a term of a contract when the contract explicitly outlines the rights and benefits that are accorded to that third party. This is based on the principles of contract law, particularly regarding third-party beneficiaries. In many jurisdictions, if a contract is drafted in a way that it clearly states the intention to benefit a third party, that third party can indeed enforce the terms of the contract.

For instance, if a life insurance policy names a specific person as the beneficiary, that individual has an enforceable right to the benefits even though they are not one of the parties to the contract between the insurance company and the policyholder. The clarity regarding the third party's rights ensures that there is no ambiguity about their ability to seek enforcement of the contract's terms.

Other options do not provide a suitable foundation for a third party to enforce contractual terms. For example, validation by a court could affirm a contract overall, but it does not automatically confer rights to third parties unless those rights were clearly stated from the beginning. Similarly, the nature of the transaction, such as being monetary, does not dictate a third party's enforceability unless the contract specifically grants them rights. Connections between the third party and one of the signers, such as mutual friends,