A recent academic article by Dr Rika van Zyl argues persuasively that, where there is a contract for the benefit of a third party, the third party accepts the benefit of the contract between the other two parties and not to become a party to the contract.
In drafting such contracts you must make sure the contract spells out clearly the intention, namely:
- whether the third party accepts the benefit or actually becomes a party to the contract;
- when the third party is entitled to accept the benefit;
- how the third party is entitled to accept the benefit;
- whether a person stipulating for a benefit in favour of the third party can withdraw that stipulation before acceptance.
If these simple steps are followed in drafting the contract, the conceptual issues will not have to be debated in the event of a dispute.
