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24 Cards in this Set

  • Front
  • Back
Delegation of Performance; Assignment of Rights

2-210 White Sheet

paragraph 1, 3, 4, 5 are about delegation
Paragraph 2 is for an assignment
What are the questions you ask yourself when are you confronted with assigning rights under a requirements contract?
Problem 183
First ask: is there an anti-assignement clause? No

Then ask the three questions: from #2 2-210
Materially impose a burden? Maybe
Materially impose ability to get money? I don’t know
Materially alter the duty? J say yes. TA- No

If J is committed to funish Gerald with all that he needs. A protion of 2-306 says that when you have a requirements contract you can’t demand anything beyond an estimate or anything beyond that that you have gotten in the past.
Payment Obligations:

Would a finance company be obligated to run a spa if they are assigned to do so?
A fianance company is not going to run a spa.

Is there an anti assigntment clause?
Too personal? No
Joe has notice joe has to pay nightflier.
Yes he does.
Section 9-406 A This is money coming from a service contract. * Says once you get notice you have to pay the assignee.
Can you transfer a future right to proceeds from pending litigation has been recognized as a valid and enforceable equitable assignment
Herzog v. Irace

Defendants argue that the DC erred in finding that the assignment was valid and enforceable against them. They also argue that the enforcement of the assignement interferes with their ethical oliation toward their client. This court found that there was no error.

In Maine, the transfer of a future right to proceeds from pending litigation has been recognized as a valid and enforceable equitable assignment.

As to the ethical obligation- I and L were under no ethical obligation, and the record give no indication that they were under a contractual obligation, to honor their client’s instructions to disregard a valid assignment.

Pg 808- notice means that he has to pay H. He was given notice so now he has to pay

This could also be viewed as a third party beneficiary contract

A----- J

H (C-b)
The formalities of an assignement:

Restatement (Second) of Contracts

5 WAYS it become irrevocable (2 in paragraph 1 and three in paragraph 3)

1) Unless a contrary intention is manifested, a gratuitous assignment is irrevocable if
a. the assignment is in a writing either signed or under seal that is delivered by the assignor; or
b. the assignment is accompanied by delivery of a writing of a type customarily accepted as a symbol or as evidence of the right assigned. ( Symbolic Delivery)

2) A gratuitous assignment is revocable and the right of the assignment is terminated by the assignor’s death or incapacity, (Section 1a and b give you exceptions) by a subsequent assignment by the assignor, or by notification from the assignor received by the assignee or by the obligor.

3) It ceases to be revocable if he obtains
a) a payment or satisfaction of the obligation
b) judgment against the obligor
c) a new contract of the obligor by novation
Mode of Assignment in General-

Article 9 what does and what does it not apply to?
-if the area of which you are involved requires writing you have to put it in writing.
- article 9 does not apply to the creation of interests in realty, wages, bank accounts and insurance
Partial Assignment:

What happens if the assignment of a contract only reveals half of what the real contract was worth?
Partial assignments-
Problem 186
1st K- Between Betty and Sammy
2nd K- Betty assigns right to rents

Can you assign the right to only partiall?
Did we have an anti-assignement? No
Too Personal? No
Materially change duties? Yes
Chance of getting return performance? Yes
Wage Assignments-
creditors who loaned money to individuals often asked for security. When a male could not assign all the wages to a creditor in order to protect the family. Nearly every state has a limitations on the assignment of wages. 1) A common limitation to make the wife sign to understand that the salary is going to a creditor. 2)Another restriction is that you may not assign your wages from a future contract only your current contract of employment.
Successive Assignments
assigns the right to three different people? Who would have the right to the money? The first one has the one who has the right to the money. First in time is first in right unless a subsequent assignee pays value in good faith without notice (BFP w/o notice of that first assignment) AND does one of four things 1) obtains payment 2) receives a symbolic delivery 3) receives a judgement 4) enters into a new contract (these are the four horsemen)
What is an antiassignment clause and when can you use it?

AAc- would be in contract number one. Divide it into two categories:
1) Does it prohibit the assignment to a right to money? The right to money is called an account receivable.
2) The second category applies to something other than the right to money
General rule number two is enforced.
Example of an Exception to the number two requirement that says when an anti-assignment clause applies to "something other than money it is enforceable"
Cheney v. J

Cheney (P) entered into a contract to sell real property to Jemmett (D). The purchase price was $32,500 with $5,000 being paid by the first of March, 1977 and the balance of $27,500 plus interest at 9.5% per annum to be paid through an escrow at Treasure Valley Bank. The principal balance had been reduced to $22,745.67 at the time of trial. The agreement stated that no assignment was valid unless the written agreement of P was obtained. D wanted to sell the real estate and P's consent was solicited. P refused to consent on the proposed assignment. To get around the assignment a rental and sales agreement was entered into between D and their buyer. The consummation of that transaction was held up by an encumbrance on the property and the buyer contracted P about that encumbrance and consented to deliver a satisfaction of the encumbrance to the parties. In March 1981, and again in May 5, 1981, P sent D written notice of default based on the alleged assignment/sale/rental agreement for the property. P sued D to compel payment of the full remaining principal balance. The trial court ruled for D and P appealed.
RULE OF LAW: When an assignment is conditioned upon consent, it will be implied that consent cannot be unreasonably withheld and that the consenting party must act fairly and in good faith in exercising his power to consent.

Cheney says it is an assignment without permission. It is in a number two cause it is for real estate. There is an anti-assignment clause. The court says that we don’t’ have to address wheather it iwas an assignementn or not because we don’t think cheney was acting in good faith.

This is an example of category two where normally they are upheld they might be interpreted like this one to avoid some injustices.
What do you do if you see and ANTI ASSIGNMENT CLAUSE on the EXAM?
The first thing you have to do is divide them into two categories:
1- does it apply to money
2- other than money
a. If other than money- the anti-assignment is effective and you can not assign the right
b. What if it deals with the right to money? If it comes from wages realty, bank account, interest or real estate. It is effective because article 9 does not apply to it.
Now we come to- what if the right to the money comes to a service contract
- the anti-assignement is never effective because of article 9
The problem arises if the money comes from a goods contract bc under article 9 says anti-assign is never effective
- Article 2 says it can be effective if the right to the money has not been earned
- EXAM- if the rights comes from a good contract you can assume it has been earned. It makes the anti-assignment clause not effective under article two. By making that assumption you have eliminated the contradiction. If it has been earned it can be assigned.
- BOTTOM LINE FOR EXAM- If the right to the money comes from a goods K or a service contract the AAC is not effective. WHY? Service- article 9 Goods 9 says not and if the 2 we assume it has been earned. If it is anything else we can assume that the AAC is effective.
- Read the facts- Look to see what it is prohibiting? If it is a Good or service? Not effective and you may assign. If it is prohibiting any other right you can not assign it unless it is waived
What if a contract had the provision
" The parties promise not to assign this contract. Any purported assignement will be void from the beginning. The parties recognize the significance of this limitation and agree it controls over any trade usage or any other limitation and agree it controls over any trade useage or any other limitation allowing contract rights to be assigned"

After this K was entered into S assigned its right to payment from B to E. Must B pay E when S deliverts the B
Problem 187

Under article 2- no. Once he delivered the Bananas now the right to the money has been earned and the anti-assignment clause is no longer effective.
It a K A signed with a spa had contained a clause stateing that the spa promises that "it will not assign this contract to a finance company" could he refuse to pay the finance company?
Service contract- article nine. It can be assigned not withstanding.

pg. 820??

Setoff and Recoupment
What defenses can the obligor use against the asignee. Contract number one is called the assigned K the other is the assignement K.
Q: If the assignee sues obligor may the obligor use the same defense it has against the assignor?
1) Recoupment- if the defense of claim arises out of the assigned K
2) Setoff- if the defense of claim arises out of any other K
A: if a Recoupment is involved than yes you may always use it.
If it arises out of any other K it is called a setoff.. You can only use a setoff you may use if the right accrues before notivication.
Can you modifyor substitute an assigned contract

it is effective only effective it if is assigned in good faith
What if a customer had an agreement with a spa. The contract contaite a provision the preserved his ability to assert defenses against assignees. The spa assigned his contract to a financial group. while working out he was injured by a negligent worker at the spa.. could he subtract his doctors bill from the bill to the financial group.
This is a recoupment because it is arising form the assigned contract. So yes he could subtract the money.
Dog? Can they deduct? Because it is a set off? The right to sue must accure before notice. It happened after notice so they can’t use it.
Can a party assert a setoff for an unrelated claim only if it accrued before the party was notified of an assignment?
Oregon Pacific (D) purchased plywood from Centralia. Centralia assigned the invoice to Seattle First (P) and P notified D of the assignment on December 13. D refused payment and P sued D. D defends the action based on setoffs. Prior to the assignment of the invoice in question, D placed two orders for plywood with Centralia that were not included in the assigned invoice. Delivery of those orders was never completed by Centralia and D claims that it can offset the invoice P held with the damages suffered from nondelivery. Centralia was insolvent at the time it assigned the invoice to P and P knew that. The trial court gave the judgment to P and D appealed

Accrue- describes when a cause of action comes into being

The court claims that the breach of K was when the claim accrued and since it did after the D had notification of the assignment, the setoff cannot be asserted successfully.
RULE OF LAW: A party can assert a setoff for an unrelated claim only if it accrued before the party was notified of an assignment.
Article 9
Article 9-404
- recoupment or setoff

Article 9-405
- you may modifiy in good faith

Article 9-406
- notice if you don’t pay you may pay twice

A 9-406d
- anti assignement clause not effective (service or goods)
Warranties of the Assignor

What are the three warranties-
Three Warraanties
1) I am not going to interfere with the assignement
2) the right that I am assigning to you does exist
3) It is not a forgery
A Warranty of promise is implied for
Pg. 843-
Says that the promise would not be implied if the contract is for the sale of land.
Delegation of Duties:


Can a promise by the assignee to assume the assignor's duties be implied from his acceptance of an assignment?
A promise by the assignee to assume the assignor's duties cannot be implied from his acceptance of the assignment.

Pg. 843-
Says that the promise would not be implied if the contract is for the sale of land.
If V is a dancer and she agrees with the company to have C fullfill her position. But C never shows is V still liable to the dance company?
- creates a third party beneficiary to the dance company
- Carla breaches
- You can sue V unless there is a novation.
- If we have a novation who may the dance company sue.. just carla