R2d § 311
Variation of a Duty to a Beneficiary
(1) Discharge or modification of a duty to an intended beneficiary by conduct of the promisee or by a subsequent agreement between promisor and promisee is ineffective if a term of the promise creating the duty so provides. (2) In the absence of such a term, the promisor and promisee retain power to discharge or modify the duty by subsequent agreement. (3) Such a power terminates when the beneficiary, before he receives notification of the discharge or modification, materially changes his position in justifiable reliance on the promise or brings suit on it or manifests assent to it at the request of the promisor or promisee.
Professor's notes
Elements: (1) discharge or modification of a duty to an intended beneficiary by conduct of the promisee or by a subsequent agreement between promisor and promisee is ineffective if a term of the promise creating the duty so provides; (2) in the absence of such a term, the promisor and promisee retain power to discharge or modify the duty by subsequent agreement; (3) the power terminates when the beneficiary, before he receives notice of the discharge or modification, materially changes his position in justifiable reliance on the promise, brings suit on it, or manifests assent to it at the request of the promisor or promisee.
Common misunderstanding: students think beneficiary rights vest immediately. They do not. Until reliance, suit, or assent (or unless the contract locks them in), the original parties can rewrite the deal at will. This is the "vesting" doctrine; it is the central limit on third-party rights.
Text
R2d § 311. Variation of a Duty to a Beneficiary.
(1) Discharge or modification of a duty to an intended beneficiary by conduct of the promisee or by a subsequent agreement between promisor and promisee is ineffective if a term of the promise creating the duty so provides.
(2) In the absence of such a term, the promisor and promisee retain power to discharge or modify the duty by subsequent agreement.
(3) Such a power terminates when the beneficiary, before he receives notification of the discharge or modification, materially changes his position in justifiable reliance on the promise or brings suit on it or manifests assent to it at the request of the promisor or promisee.
[VERIFICATION REQUIRED: subsection text drafted from memory; cite-check against ALI Restatement (Second) of Contracts official text before publication]