A third party is a party that is not one of the two parties involved in a contract. However, even though third parties are not technically included in the contract, they may be affected by it.
In the context of the law, third parties are not bound by the terms of a contract between the first and second party. Therefore, they cannot be sued for a breach of contract.
There are many situations in which a third party may be affected by a contract between two parties. For example, if one party sells products to another party under a contract, and then the buying party sells the products to customers, the customers would be the third party.
Even though third parties are not bound to the terms of the contract, the first two parties are. Thus they are legally obligated to meet the terms of the contract.