Third Party Beneficiary

Contracts are everywhere. They are a part of everyone’s daily lives. Learning what constitutes an enforceable contract was very useful. A contract, is a promise that is supported by a benefit, or a bargain. This promise, or offer, has to be clearly accepted and the parties need to share a common intent and understanding of the formation. The offer cannot be an invitation. It must be a clear intent to enter into an agreement by the offeror. It must state the consideration in its terms and it must be accepted or rejected by the offeree. A contract can be done verbally or in writing. The U.C.C. requires some contracts to be done in writing such as leases and sale of goods over $500. Acceptance has to be definite and clearly show …show more content…
There are exceptions to this rule: third-party beneficiaries and assignment or delegations. A third-party beneficiary can be named to receive the benefits of a contract. In order to be a third-party beneficiary, there must be a clear expression to give the benefit to the third-party in the agreement. An assignment is when a third-party is given the rights to the benefits of the contract. This is not allowed if the original contract prohibits assignments, or if it will substantially change the duty and risk to the obligor, or substantially reduce the value. Under an assignment, there will be the assignor, the one who is transferring the rights; the obligor, who is the other party; and the assignee, who is the recipient of the transfer. Article 9 of the U.C.C. governs assignment of any transaction that was for the creation of interest in personal property. Consideration is not a requirement for an assignment but a gratuitous assignment can be revoked, unless one of theses exceptions are present: it was in writing; novation occurred; the assignee receives the benefit prior to revocation; if the assignee will suffer a detriment; or if the tangible token was received. In order to be revoked, the assignor can: give notice to the assignee or obligor, assign the same rights to another, file bankruptcy or accept the benefit directly from the obligor. It can also be revoked if the …show more content…
Baxendale, 156 Eng. Rep. 145 set the rules to make a distinction between direct and indirect damages. (page 265) The rule sets fourth that the defendant is allowed to received damages caused from the breach itself, and what both parties could have foreseen as a consequence of the breach when the contract was formed. In this case, the plaintiff was the owner of a mill and a crank shaft broke. The plaintiff contracted the defendant to deliver the broken equipment to the manufacturer, who promise to perform the next day. The defendant didn’t deliver it the next day, and that resulted in several days of lost profit for the plaintiff. The court did not allow plaintiff to collect damages for the loss in profits because at the time the contract was formed, the defendant was not aware or couldn’t have reasonably known about this. Direct damages, or general damages, are the effect of the