Explanation of Article 103
The previous articles determined the provisions of stipulation for the benefit of a third party and its effect. This article establishes that for the stipulation for the benefit of a third party to be valid, it is not required for the beneficiary to be present at the time of the stipulation. It is permissible for the beneficiary to be a future person; for example, a person may enter into a cooperative insurance contract with an insurance company for the protection of his children, whether they are present or born later, whereby he pays insurance premiums, and in the event of his death or total disability and the fulfillment of compensation conditions, the company pays the insurance amount to those present at the time. Similarly, two parties may enter into a contract, and one party may stipulate to the other to provide health insurance, work injury insurance, training programs, or a minimum wage for those who will work for the other party, i.e., the contractor. Such a condition is prevalent in franchise contracts and government franchise contracts. It is also permissible for the beneficiary to be a legal entity not present at the time of the contract, such as when a franchisor stipulates that the franchisee provides services for free or at reduced fees to existing or future orphan associations in a specific area.
The default is for the beneficiary to be specified at the time of the contract, but it is also permissible for the beneficiary to be unspecified at the time of the contract if it is possible to specify them at the fulfillment of the stipulated obligation, whether the person is a natural person; for example, a person may stipulate that the beneficiary is one of his children who is unemployed at the time of fulfilling the obligation, so the deserving one is not known until then, or a legal entity, such as stipulating that the beneficiary is the best university or charity in a specific area according to a classification issued by a specific official body at the time, so that association is not known until fulfillment.
Related To
Article 103
If a stipulation is made for the benefit of a third party, such party may be a person to be specified in the future or a person not specifically specified at the time of concluding the contract, provided that it is possible to specify such person upon the performance of the stipulated obligation.