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Third Party

It is somone other than the first two principals who have entered into a contract or an agreement. Third party are not a direct party in the agreement or contract,but they may be present as a beneficiary to the contract or somone affected by the contract between the first two principals ( first party and second party). This could be the case of third party insurance in automobile industry where if one of the principle is insurance company and another is the automobile owner. The automobile owner if, damages the the third party's ( someone else's) car by an accident, and has a third party insurance cover, the insurance company covers up for the damage for the third party's car.

 
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