Vesting of Rights
Once the beneficiary's rights have vested, the original parties to the contract are both bound to perform the contract. Any effort by the promisor or the promisee to rescind or modify the contract at that point are void. Indeed, if the promisee changed his mind and offered to pay the promisor money not to perform, the third party could sue the promisee for tortious interference with the third party's contract rights.
There are three tests used to determine whether the third party beneficiary's rights have vested:
- if the beneficiary knows of and has detrimentally relied on the rights created;
- if the beneficiary expressly assented to the contract at the request of one of the parties; or
- if the beneficiary files a lawsuit to enforce the contract
Read more about this topic: Third-party Beneficiary
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