Third Party Beneficiary Contracts

The privity of contract is the fundamental principle of ancient contract theory. It means that contract relation only restrains the contract parties. Anybody, who is not a contract party, neither enjoys contract rights, nor bears contract obligations. However, with the passage of time, the principle does not conform to the needs of balancing social interests and realizing justice since social and economic relations become increasingly complicated. Therefore, the third party beneficiary contract has been gradually accepted by many countries and the third party beneficiaries can insist on contract rights and look into the liability of breach. The third party beneficiary contract is a breakthrough in privity of contract and it provides the strong theoretical support for the third party beneficiaries .Therefore, the question discussed in the paper is of great theoretical and practical significance.The paper consists of four parts:The first part, which is the general description of the third party beneficiary contract, introduces the origin and development of the third party beneficiary contract at the beginning; then, reflects the principle of privity of contract, pointing out that the third party beneficiary contract is motivated from the dilemma of privity of contract in real life and that the appearance of the third party beneficiary contract is objective and unavoidable; finally, discusses the value of the third party beneficiary contract, that is, the balance between freedom and justice and the balance between efficiency and safety.The second part, which serves as the basic theory of the third party beneficiary contract, first analyzes the theory basis on which the third party beneficiary contract is established; then, proposes that the terms for the benefit of third party is not an independent contract but makes up one contract together with the basic contract; next, explains the legal relationship of the third party beneficiary contract; in the following section, compare it with relevant institutions; finally, defines the third party beneficiaries and the benefit.The third part ,which discusses the institution configuration of the third party beneficiary contract, analyzes the establishment of the third party beneficiary contract, the expression of the third party beneficiaries, the performance of the third party beneficiary contract, the modification or rescission of the third party beneficiary contract, the remedy of the third party beneficiary contract. Through the above discussion, the working process of the third party beneficiary contract in social reality is reflected.The fourth part, which discusses the improvement of the third party beneficiary contract in our country ,analyzes the defects of China's third party beneficiary contract from the perspective of legislation and legal practice at the beginning, then put forth some suggestions to improve the current situation, that is, from the macroscopic perspective, to correctly deal with the relationship between the third party beneficiary contract and privity of contract, and make specific regulations of the third party beneficiary contract together with the suggested version of China's Civil Law Code from the microscopic perspective.