Which of the following involves a creditor beneficiary relationship?
A) A contract between an employer and a union representing the employees which is made for the benefit of the employees.
B) A contract between the owner of a building and the contractor stating that the contractor will pay the contractor's employees at a stated rate.
C) A contract where the insured names a bank with which he has a loan as the beneficiary of a life insurance policy.
D) A contract between a governmental unit and business for services to be rendered to area citizens.

Question

Quizplus · Accepted Answer

In option C, the bank is a creditor beneficiary because the contract (life insurance policy) benefits the bank directly by ensuring the loan is repaid if the insured dies. This creates a direct benefit to the bank, which has a financial interest in the insured's obligation being fulfilled.

Which of the Following Involves a Creditor Beneficiary Relationship