How is a creditor beneficiary relationship usually formed?
A) a party buys a consumer good from a retail store and the retail store extends credit for the purchase
B) a party buys a good second-hand from someone who borrowed money to purchase the good, and the second-hand buyer promises to pay the remaining balance of the loan
C) a party purchases a good on credit, but the creditor requires a co-signer before the credit will be extended
D) a party purchases a good from the seller, but asks the seller to deliver it as a gift to a third person
E) a party borrows money from a bank prior to needing the funds to make the purchase

Question

Quizplus · Accepted Answer

In a creditor beneficiary relationship, the creditor (the party who extended the loan) is the beneficiary and the debtor (the party who received the loan) is the obligor. Option B describes a situation where a second-hand buyer promises to pay the remaining balance of the loan to the creditor (who is the original beneficiary) after buying the good from the debtor.

How Is a Creditor Beneficiary Relationship Usually Formed