3rd party Flashcards
3rd party beneficiary: definition
1) not a party to the contract
2) able to enforce the contract others made for her benefit
Promisor: definition
person making the promise that benefits the third party
Promisee: definition
person who obtains the promise that benefits the third party
Intended v. Incidental beneficiary
only an intended beneficiary has contract rights
When a 3rd party’s rights vest
1) knows of and has relied on the contract
2) has assented as requested
Beneficiary v. promisor
may sue directly once rights have vested
Promisee v. promisor
may sue directly
Donee beneficiary v. promisee
cannot sue
Creditor beneficiary v. promisee
can sue on preexisting debt
Assignment: definition
transfer of rights under a contract in 2 steps
1) contract between only 2 parties
2) one of the parties later transfers rights under that contract to a 3rd party
assignor: definition
party to the contract who later transfers rights to another
assignee: definition
not a party to the contract but able to enforce the contract because of the assignment
obligor: definition
other party to the contract whose rights were not assigned
Prohibition of assignment in K
1) means the assignor breached
2) but assignee can still enforce if didn’t know of the prohibition
Invalidation of assignment in K
1) takes away the right and power to assign
2) breach by the assignor
3) no rights in the assignee
CL rights to assign
may not assign if substantially changes the duties of the obligor
Assignee v. obligor
1) assignee can sue obligor
2) BUT if obligor paid assignor b/c didn’t know of the assignment duties fulfilled until knows of assignment
Multiple assignments: gratuitous
last assignee wins
Multiple assignments: for consideration
1) first assignee for consideration wins UNLESS
2) subsequent assignee does not know of the earlier assignment and is the first to obtain payment, novation, judgment, or indicia of ownership
Multiple assignments: for consideration and as breach of warranty
assignor makes a warranty to assignee when consideration is paid that the rights assigned are assignable and enforceable
Delegation: definition
party to a contract transferring work under the contract to a 3rd party
Delegation Permitted unless
1) contract prohibits delegations or prohibits assignments
2) contract calls for VERY SPECIAL skills
3) person to perform contract has a VERY SPECIAL reputation
Liability for delegating party
always remains liable
Liability for delegatee
liable only if receives consideration from delegating party
