What are 3rd Party Agreements? Your typical business arrangement, contract, or agreement is between two parties: a company and another company, a company and a client, or a company and an employee. Sometimes, it’s necessary to involve another party in order to the get the job done. When this third party is added, it becomes known as a third party agreement or third party contract. These 3rd party agreements stipulate that the new party will take over X duties from the original contract. Essentially, it transfers responsibilities and rights from the initial contract to the new third party. 3rd Party Agreements and their Use Most often, 3rd party agreements are used in financial and loan situations. Say, for example, that John Smith received a scholarship from his local Boy Scout organization. The initial contract is between John and his school: he gets an education in exchange for paying his tuition. By agreeing to pay part of John’s tuition, the Boy Scout group has entered into a third party agreement with John and his school. Third party agreements are also common in the business world. A company has an initial contract with a client to deliver X product. They don’t have the resources on staff to create this product in house, so they find a subcontractor who can handle the work for them. This subcontractor agrees to certain rights and responsibilities in order to create the client’s X product. This becomes a third party agreement. Legalities of 3rd Party Agreements Third party agreements can often lead to disputes from contracted parties. To ensure there are no undue disputes or litigation regarding your 3rd party agreements, always be sure to consult a qualified legal professional before moving forward with a contract. For more information on 3rd party agreements or for help in drafting your own, contact de la Riva & Associates today.

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