What represents a cost that benefits a third party?

The correct answer is a negative externality. A negative externality occurs when the actions of individuals or businesses result in costs that affect third parties who did not choose to incur those costs. For example, when a factory pollutes a river, individuals who rely on that river for drinking water or recreation are negatively impacted despite not being involved in the factory's operations. This situation illustrates how the costs of a decision made by one economic agent extend beyond that agent, impacting others in ways not compensated by the initial party.

On the other hand, a positive externality refers to benefits enjoyed by third parties as a result of an individual's or business's actions, which is not the answer here. A service contract would typically outline the terms of service between a provider and a customer without affecting third parties, while a warranty applies to the agreement between a seller and a buyer regarding product reliability and service, also not relevant to the context of external costs affecting third parties.