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21 Cards in this Set
- Front
- Back
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xl) Rights and defenses
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xli) Can an assignee enforce his rights by direct action against the obligor?
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(1) Yes
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xlii) Once the obligor has knowledge of the assignment, she is protected only by
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(1) Paying (or performing for) the assignee.
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xliii) Define: Real Defenses
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(1) Are those showing that no contract was validly formed, or that there was fraud in the execution of the contract (eg the obligor’s signature to the contract was forged; or she signed the contract thinking it was an autograph book).
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xliv) Define: Personal Defenses
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(1) Personal defenses generally admit the formation and proper execution of the contract but assert some bar to its enforcement.
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(1) All assignees take subject to _____ defenses
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xlv) All assignees take subject to real defenses
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(1) Assignees take subject to personal defenses only to the extent where _____ or an ______
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xlvi) Assignees take subject to personal defenses only to the extent where holders in due course of commercial paper take subject to certain personal defenses or an FTC rule requires persons who sell consumer goods or services on credit to include a notice in any consumer credit contract or note that any assignee (holder) of the contract takes subject to all claims and defenses that the consumer-debtor could assert against the seller.
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(1) Assignees of token chooses who qualify as “holders in due course” under the UCC ___ ____ all personal defenses
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xlvii) Assignees of token chooses who qualify as “holders in due course” under the UCC cut off all personal defenses
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xlviii) Assume A and B enter into a contract whereby B promises to deliver certain goods and A promises to pay $1000 for them. B then assigns to C his right to payment. C sues to enforce A’s promise to pay, and A defends by saying that B never delivered the goods. This is a failure of ____
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(1) Consideration
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xlix) Any defenses (real or personal) that the obligor has against the original obligee may be asserted against any ordinary assignee or subassignee—even a _______-- provided the defense ___..
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(1) Bona fide purchaser (one who paid value for the assigned right and took without notice of the defense) (2) Provided the defense existed prior to the obligor’s being given notice of the assignment. (UCC §9-404)
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l) The obligee cannot vest in a third party greater rights ___...
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(1) Than he himself would have.
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li) [Consumer protection statutes] Some statutes governing retail installment contracts eliminate the requirement that the claim or defense exist at the time of the assignment. They simply provide that ___..
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(1) That the assignee takes subject to ALL “equities or defenses” of the buyer against the seller-assignor (although any liability of the assignee is generally limited to the debt owed by the buyer at the time of the assignment (Cal Civ Code §1804.2)
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lii) If the original promisee’s (ie. Assignor’s) duties were still executory at the time of the assignment, nay breach on his part after the assignment or tnoice thereof may still be asserted against ___...
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(1) Any assignee or subassignee. Assignees are deemed to take an assigned right subject to the implied condition that the assignor will perform his side of the contract properly.
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liii) Ex: A and B enter into a contract whereby B promises to deliver certain goods to A on June 1 and A promises to pay $1000 for them on that date. On May 1, B assigns her right to the money to C, who notifies A of the assignment. On June 2, C sues to enforce payment. A may assert by way of defense that B ___...
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(1) Never delivered the goods, even though this defense arises subsequent to the assignment. [defenses before or after assignment]
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liv) Under some statues, the assignee of a retail seller is liable to the buyer for any damages resulting from assignor’s ___...
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(1) Nonperformance (at least up to the amount of the assignee’s debt.
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lv) If the obligor represents to a prospective assignee that he has no defense or setoff against the obligee-assignor, and the assignee relies thereon in paying consideration for the assignment, the obligor may be ___...
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(1) Estopped to raise a defense against the assignee.
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lvi) If the obligor has executed an enforceable waiver of whatever defenses eh has agasint eh assignor, he will be ____ from later asserting such defenses agasint the assignee. This is true even if the waiver was executed as part of the ____. With certain limitations (___ and ____)
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(1) Barred (2) Original contract(ie :if this contract is hereafter assigned, all defenses are waived in favor of such assignee”) (3) UCC and Consumer protection statues.
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(1) Under the UCC, waivers of defense by obligors are enforceable only if the assignee (eg lender, finance company) purchased the contract for value in ____ and without ___...., and these waivers are inapplicable to ______ that could be asserted against a holder in due course of a negotiable instrument
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lvii) Under the UCC, waivers of defense by obligors are enforceable only if the assignee (eg lender, finance company) purchased the contract for value in good faith and without notice of any defenses the obligor might have against the assignor, and these waivers are inapplicable to defenses that could be asserted against a holder in due course of a negotiable instrument
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(1) Many states have statues that prohibit such waivers of defense in retail installment contracts involving the ____ or ____ of consumer goods, so that no assignee can take free of defenses assertable against the seller
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lviii) Many states have statues that prohibit such waivers of defense in retail installment contracts involving the purchase or lease of consumer goods, so that no assignee can take free of defenses assertable against the seller
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lix) If the assignor and obligor in good faith modify the contract after notice of the assignment, does the modification impair the rights of the assignee? Restate the traditional view and modern trend.
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(1) Traditional view: the modification does not impair those rights. Having notice of the assignment the obligor deals with the assignor at his peril. (2) Modern trend: The UCC recognizing commercial realties, provides that in the case of commercial assigns a modification or substitution of a right to payment that has not yet been fully earned by performance that is made in good faith is effective against an assignee. Even after notice. However, fi a right to payment has been fully earned by performance, modification or substitution can only occur if made in good faith and if no t notice of the assignment was given to the obligor. UCC §9-405
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lx) Suppose A and B enter into a contract whereby B promises to deliver goods, and A promises to pay $1000 for them. B assigns her rights to C. C borrows $500 from A (obligor); A could have asserted this by way of setoff to any action by C on the contract. C now subassigns to D, who seeks to enforce A’s obligation to pay the $1000. \\\\ what is the traditional and modern rule governing D’s cause of action?
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(1) Traditional rule: A defense or setoff that the obligor acquired against some intermediary assignee (ie C) cannot be asserted against a subassignee (D) who is a bona fide purchaser (ie pays value of the assignment and takes without notice of the defense. EXCEPTION: An intermediary assignee against whom a defense or setoff exists cannot :”ship through” a bona fide purchaser as a means of cutting off the defense. C could not subassign to D and then have D reassign the right to him. A then could still assert setoff against C. (2) MODER RULE: A subassignee is treated no differently than the original assignee insofar as defenses and setoffs are concerned; i.e. if the obligor has or obtains any defenses against an intermediate assignee, he can assert it against all subsequent assignees. [ONLY APPLIES where obligor received notice of the reassignment. A could assert his setoff against C only if he acquired it before he received notice of C’s assignment to D. ]
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