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24 Cards in this Set

  • Front
  • Back
The third-party problems?
1. 3rd Party Beneficiary Law
2. Delegation of Duties
3. Assignment of Rights
What's the definition of 3rd party beneficiary law?
Two people enter a K with the intent to benefit a 3rd party. Consequence: the TPB can enforce the K.
Examples of 3rd party beneficiaries?
Such as a beneficiary of a insurance policy, when insurer refuses to pay...then the TPB can enforce the policy against the insurer
Who is the TPB?
A person who didn't make a K, but has rights under it b/c the K was intended to benefit him.
Promisor: person who promises to do something for the 3d party
Promisee: the other contracting party?
Intended/incidental beneficiary?
If the 3d party is named in the K, she's an intended beneficiary; if not, she's an incidental beneficiary. Only an INTENDED beneficiary has legal rights.
Creditor/donee beneficiary?
If the promisee's main reason for entering the K is to discharge a debt he owes to the 3d party, the 3d party is a creditor beneficiary; otherwise he is a donee beneficiary.
Rescission or modification of the contract under TPB law?
Modification or rescission is ok if the rights have not yet "vested." Or if the K allows for it.
Rights of TPB
1. Intended benef. can sue breaching promisor, even if no privity of K
Example of delgation
X contract to mow Y's lawn for. He delegate his duty to W.
Who is the obligee/delegating party/delgate?
Obligee: Person to whom performance is owed.
Delegating party: person who delegates the duty to perform
Delegate: person to whom the duty is delegated.
General rule on delegation?
K duties may be delegated w/o consent of the obligee.
Exceptions to delegation of duties?
1. K prohibits delegation
2. K prohibits assignment (so therefore no delegation).
Requirements for effective delegation?
1. Consideration is not required.
2. Consent of the obligee is not required.
Consequences of delegation?
1. The delegating party remains liable to the obligee
(Under novation, breach will let delegating party off the hook)
2. The delegate is liable to the obligee only if the delegate got consideration.
What is the obligor under assignment of rights?
Person who owes the performance.
Comparison with TPB?
1. TPB: all three parties are involved from the start.
2. Assignment: 2 people contract and a third person appears later on.
Requirements for making an assignment
1. Consideration not required b/c assignment is a present transfer.
2. Words of present assignment: "I assign" not 'promise' or 'will assign.'
Limitations on assignment
1. An assignment can't substantially change the duties of the obligor.
2. A requirements K is assignable as long as the assignee's reqs are not out of line with the assignor's reqs.
3. K clauses: distinguish between a clause that merely prohibits assignment and a clause that completely invalidates an assignment.
Rights of an assignee?
1. The assignee can sue the obligor, but is subject to the same defenses the obligor could have raised against the assignor.
Effect of notice to obligor of assignment
No, pmt to assignor is effective, unless obligor was aware of assignment.
Multiple assignments?
1. Gratuitous (gift) assignments
2. Assignments for consideration.
What are gratuitous assignments?
The last gratuitous assignee in time prevails because a later gift assignment revokes an earlier one.
Assignments for consideration. General rule and exception?
1. Rule: 1st assignee for consideration wins b/c assignments for consideration are more durable in nature.
2. Exception: A later assignee for consideration prevails over earlier assignees if he doesn't know of the prior assignment AND is the 1st to obtain pmt from or a judgment against the obligor.