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12 Cards in this Set

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  • Back
  • 3rd side (hint)
Third Party Beneficiary
- Not a party to a K
- Has rights under K because K was intended to benefit him
Promisor: party who promises to perform for TPB
Promisee: party who secures the promise
Intended Beneficiary: person the contracting parties intend to benefit (usually named in K); has legal rights

Incidental: just happens to benefit
Donee Beneficiary
TPB who receives a gift of performance from the promisee (typical)

If promisee owes a debt to the TPB, the TPB is a creditor beneficiary (rare)
Rescission & Modification w/3d parties
Generally, Promisor and promisee can rescind or modify K until rights of TPB have "vested" (he knows about K and relies on it) [kevLAR vest]

BUT contrary language in K controls (i.e., K allows change of beneficiaries)
Rights of a Third-Party Beneficiary

1) Against Promisor
2) Against Promisee
3) Rights of Promisee Against Promissor
1) Intended beneficiary can sue breaching promisor despite no privity of K

2) TPB can't recover against promisee unless he's a creditor beneficiary

3) Can recover if no performance (tho if TPB is donee beneficiary, may not have suffered much damage)
Delegation of Duties w/3d parties

Generally, contractual duties may be delegated w/o consent of person to whom performance is owed ("obligee")
1) Contract language controls [* if K prohibits assignment, no delegation either***]

2) Special skill or reputation

3) Rights of obligee
***delegating party remains liable [distinguish from novation***]
* Against the delegate (only if consideration)
Assignment of Rights

2 people make a K; later, one (assignor) transfers his rights to a third party (assignee). The party who owes the duty is the obligor.
** In assignment, 2 parties enter a K and third person (assignee) appears later. With a 3d party beneficiary, all 3 parties are present from the outset.
Requirement for Assignment of Rights

1) Need language of present transfer (assignment) "I assign..."
2) Gift assignments are valid. Don't need consideration.
--> Assignment of rights transfers only rights. Assignment of an entire K transfers rights and obligations.
Restrictions on Assignment

Contract language controls: Distinguish a clause that prohibits assignments from one that completely invalidates assignment.
"Rights under this K are not assignable" --> assignment still valid

"All assignments are void" --> completely invalidates assignment!
Can always assign right to payment

Today, requirement contracts are assignable if assignee's requirement not out of line with assignor (doesn't substantially change obligor duties)
Assignee's Rights Against Obligor
Assignee --> assignor shoes (and same rights)

Only liable once knows/aware of assignment
Multiple Assignments

--> If you see multiple assignments, analyze each assignment in the order it was made to see if that particular assignment was valid
1) Gratuitous "Gift" Assignments: Last in time prevails over earlier gratuitous assignees; later gift assignment revokes earlier one

2) Assignments for Consideration: First assignee for consideration prevails over subsequent assignees; assignment for consideration is more durable than gratuitous assignment

Exception: Later assignee for consideration prevails if he does not know of earlier assignments AND is first to get payment from or a judgment against obligor