Which type of beneficiary receives no benefit from a contract but may still have rights under it?

The term "incidental beneficiary" refers to a party who may benefit from a contract between two other parties but does not have any enforceable rights under that contract. These individuals or entities happen to benefit from the contract's execution without being a primary party to the agreement. They may receive an indirect advantage, but legally, they cannot claim a right to any benefits or seek enforcement of the terms of the contract.

For instance, if a contract is formed between a contractor and a homeowner to renovate a house, the neighbors might benefit from the increase in property values resulting from the renovations. However, they have no legal standing to enforce the contract or claim any rights related to it—they are merely incidental beneficiaries.

In contrast, donee beneficiaries and creditor beneficiaries have defined rights under a contract. A donee beneficiary is intended to receive a benefit as a gift from one party to another, while a creditor beneficiary is someone who has rights to the benefits because they are owed a debt. The principal beneficiary is typically a party who is first and foremost intended to receive benefits from a contract, which aligns them closely with the contract's purpose.