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

Question

Quizplus · Accepted Answer

In a creditor beneficiary relationship, the promisee intends to benefit a third party (the creditor) to whom the promisee owes an obligation or debt. In choice A, the insured names a bank (to which he owes a loan) as the beneficiary of a life insurance policy, intending to secure or pay off the debt with the policy proceeds, which is a classic example of a creditor beneficiary relationship.

Which of the Following Involves a Creditor Beneficiary Relationship