Abstract:

The positions of creditors and third parties in third-party beneficiary contracts are not unified， and conflicts may arise over remedies when the debtor defaults. Special solutions should focus on the unique consideration and contract purpose， particularly regarding rescission and damages. Such contracts can be classified as donative or satisfaction-based. For the former， creditors should have sole discretion over remedies. For the latter， attention should be paid to the creditor’s use of the debtor’s performance as security or satisfaction of their own debt to the third party， thereby enhancing the third party’s reliance. Remedies should reflect this security function： generally， contracts benefiting third parties should be preserved， and rescission allowed only when the creditor’s obligation to the third party is extinguished， typically upon satisfaction. For alternative performance and damages， alignment between the creditor’s obligation to the third party and the debtor’s obligation is essential.

Key words: third-party beneficiary contract, breach remedy, creditor’s right to rescind, damages for alternative performance