3d Party Beneficiaries, Assignment & Delegation Flashcards
When does a 3d party beneficiary contract result?
When two parties enter into a K with the understanding and intent that the performance to be rendered by one will go to a 3d person.
An intended beneficiary is a person:
who has a right to sue on a 3d-party beneficiary K because the original contracting parties either explicitly or implicitly intended to benefit them
An incidental beneficiary is a person:
who is a 3d party that will benefit from a promisor’s performance, but who may not meet the test for intended beneficiaries.
They have no right to enforce a 3d-party beneficiary K.
Because parties to a K are free to modify or rescind it by mutual consent, they can modify or rescind a 3d-party beneficiary provision:
without the beneficiary’s consent unless and until the beneficiary’s rights under the K have vested
Vesting occurs with regard to an intended beneficiary when:
1) the beneficiary brings suit on the matter
2) the beneficiary changes her position in justifiable reliance on the contractual promise
3) the beneficiary manifests his assent to the K at the request of either the promisee or the promisor; or
4) the rights of the beneficiary have vested under an express term of the K providing for such vesting
In a 3d party beneficiary suit, any valid defenses the breaching promisor would have to the enforcement of the K will also be:
effective against the beneficiary.
Creditor beneficiary:
Promisee seeks a performance from a promisor that will satisfy an obligation owed to the 3d party
Donee beneficiary:
Promisee seeks a performance from a promisor in order to make a gift of that performance to a 3d party
The second restatement doesn’t distinguish between creditor and donee beneficiaries; instead, it focuses on:
intended beneficiaries and incidental beneficiaries
An assignment is:
a transfer of a right to receive a performance under a K
If A & B have a valid K, and B assigns her rights under the K to C:
A is the obligor (the party with the obligation to perform)
B is the assignor (the party who assigned the right)
C is the assignee (the party to whom the right was assigned)
To make an effective assignment, the assignor must:
manifest an intention to make a present transfer of the right without further action by the owner or the obligor
When is a right not assignable?
When the assignment would materially alter the risks to or obligations of the other party to the K.
What does an assignee get?
Assignee gets whatever rights to the K his assignor had, and the assignee takes subject to whatever defense the obligor could have raised against the assignor.
If a right is assigned to multiple assignees:
the majority rule is that the first assignee prevails
