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12 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Third Party Beneficiary
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- Not a party to a K
- Has rights under K because K was intended to benefit him |
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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 |
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Donee Beneficiary
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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) |
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Rescission & Modification w/3d parties
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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) |
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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) |
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Delegation of Duties w/3d parties
Generally, contractual duties may be delegated w/o consent of person to whom performance is owed ("obligee") |
Exceptions:
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) |
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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.
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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.
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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! |
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Restriction on assignment CANNOT SUBSTANTIALLY CHANGE DUTIES OF OBLIGOR
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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) |
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Assignee's Rights Against Obligor
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Assignee --> assignor shoes (and same rights)
Only liable once knows/aware of assignment |
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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 |
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