3rd Party Beneficiary Flashcards
Intended Beneficiary
A beneficiary is intended if BOTH parties intend to create the obligation
Have rights to enforce the contract
Incidental Beneficiary
Not intended by both parties, and have no rights to enforce the contract.
Do beneficiaries need to be identified?
No, identification is not required. (ex. life ins. for my kids)
§309 Defenses Against the Beneficiary
Pre K (1) Any formation defect results in no K. Post K (2) Impracticability, non-occurence of a condition...
§311 Vesting
Gen Rule: the promissor and promisee retain power to discharge or modify the duty by subsequent agreement
Such a power terminates when the beneficiary, before he receives notification of the discharge or modification
Exceptions:
1) 3rd party acted in reliance (change position, now has rights)
2) brings suit on it (sues on K)
3) 3rd party accepted
Public Services
Must identify if beneficiary relationship was INTENDED to be created. (look to conduct/actions/words).
To be bound as a 3rd party beneficiary…
The terms of the contract must clearly express intent to benefit that party or an identifiable class of which the party is a member.
(the intent of both parties to a K determines whether a 3rd party has K rights as a 3rd party beneficiary )
§ 317 Assignment of a Right
An assignment of a right is a manifestation of the assignor’s intention to transfer it by virtue of which the assignor’s right to performance by the obligor is extinguished in whole or in part and the assignee acquires a right to such performance.
Exceptions to Assignment
A right can be assigned UNLESS
(1) it would materially change the duty of the obligor
(2) it would materially increase the burden of risk imposed on him by his K
(3) it would materially impair his chance of obtaining return performance
(4) it would materially reduce its value to him
(5) forbidden by statute
(6) forbidden by the contract
Privity of K
In order to enforce K, need to have privity of K
How do 3rd party beneficiaries acquire rights?
3rd Party beneficiaries only acquire rights that are given to them.
§318 Delegation of a Performance Duty
An obligor can properly delegate the performance of his duty to another UNLESS the delegation is contrary to public policy.
A promise requires performance by a particular person only to the extent that the obligee has a substantial interest in having that person perform.
Niether delegation of performance nor a contract to assume the duty made with the obligor by the person delegated DISCHARGES any duty or liability of the delegating obligor.
Can assign a right and delegate a duty. Exceptions: 1) Personal Service K's, cannot be assigned and delegated 2) specific person 3) K or statute says cannot be assigned
Can you delegate a personal services K?
NO (considered servitude)
Novation
turns 3 parties into 2 (1 of us is no longer responsible)
- a new contract wherein the obligee discharges the obligor from her duties under the K and agrees to accept the delegate as a complete substitute.
Withholding consent
Can only be done for a good reason/need to perform in good faith.
When 2 party transactions
Promisor/ Promisee
When 3 parties to a transaction
Delegator/ Delegatee
Assignor/ Assignee
Obligor/ Obligee
Who is the obligor/ obligee?
Obligor- same person as promisor
Oblgiee- can stretch, person who receives the benefit
Can a delegator fully relief himself of a duty?
NO. can never fully relief themselves of a duty!!!
Can delegate a duty but still held liable for that duty
When can a right be assigned?
In whole or in party by the parties
Assignment v. Delegation
assignment- is the transfer of rights under a K
delegation- is the transfer of duties and obligations
Delegation
duties can be delegated unless other party to the K has a substantial interest in having the delegating individual perform
(ex: in personal services contract involving special skill or taste)
-When duties are delegated the delegator is not released from liability, and recovery can be had against the delegator if the delegatee does not perform.
- person who transfers the duty= delegator
- person whom the duty is transferred= delegate
- person whom the delegated duty is owed under the original K is the obligee
Difference between 3rd party beneficiaries and assigness and delegates?
3rd party beneficiaries acquire their interest at the time of the original contract was formed.
-Assignees and delegates acquire their rights through a later transaction with one of the original contracting parties.
Assignment
transfer of a contractual right or benefit.
-Party who transfers the right is the “obligee” under the original K, and upon assignment is called the “assignor”
(obligee=assignor)
-Party who acquires right or benefit is the assignee.
-The party who owes the right under the original K and now owes it to the assignee is called the “obligor”
(obligor=promisor)
Tortious Interference
A person who wrongfully and maliciously, with notice interrupts the contractual relationship, commits a wrongful act for which he is responsible at law.
Consultant’s Privilege
(1) It is limited to advice w/in the scope of the consultant’s engagement
(2) GOOD FAITH - If consultant does not give honest advice (if he uses engagement to hurt other people exclusively for his own benefit- or out of dislike of his victim- rather than for the benefit of his client) he forfeits the privilege
