5th issue: Third-Party problems Flashcards
what do you call a person trying to enforce a K they did not make
3rd party beneficiary
how will know 3rd party beneficiary problem
look for more than 3 people
- look for 2 people k’ing with common intent to a 3rd party.
vocab: 3rd party beneficiary
not a party to K. able to enforce others made for her benefit
vocab: promisor
look for person making the PROMISE THAT BENEFITS THE 3rd party beneficiary
vocab: promisee
look for person who OBTAINS THE PROMISE THAT BENEFTS 3rd party beneficiary
vocab: intended/ inciddntal
only intended beneficiares have contractal rights
- intent of the 2 parties K determines w/e a 3rd party beneficiary is itended or incidential
when will you know a 3rd party beneficiary is intended B
always named in K
vocab: creditor/donee
usually donees
- Look w/e 3rd party beneficiary was a creditor of the promisee b4 contract
what are the only 3rd party beneficiary that can enforce K
INTENDED B’s
what is the test w/e party can cancel 3rd party beneficiary K
1) w/e 3rd party beneficiary KNOWS OF AND
2) has relied on or assented as requested
- If both then cannot cancel or modify
does 3rd party beneficiary need BOTH knows of and relied on or assented as requestd to prevent a party from canceling or modifying K
YES
4 people who can sue whom
1) B can recover from PROMISOR
2) Promisee can recover from promisor
3) GR: B CANNOT recover from promisee
4) LIMITED x/c: creditor B can recover from promisee BUT ONLY on pre-existing debt
can B recover from the promisee
NO
what is the x/c that B cannot recover from promisee
CREDITOR B can recover from promisee but only on pre-existing debt
defenses for 3rd party B
If 3rd party beneficiary sues promisor, promisor can assert any defense that he would have if he had been sued by promisee
generally what is assignment of rights
a person trying to enforce a K she did not make
what is an assignment
a transfer of rights under a K
1) k b/w only 2 people and
2) one of the people later transfers rights under that K to a 3rd party
vocab: assignor
party to K who later transfers rights under the K to another
vocab: assignee:
not a party to a K. able to enforce the K b/c of the assignment
obligor
other party to the K
what if the K is a prohibition on assignment?
if simply says do not assign, only prohibition.
- assignor is liable for breach of K BUT
2) assignee who does not know of the prohibition can still enforce the assignment
if the K is a prohibition on assignment can the assignee still enforce assignment
assignee who does not know of the prohibition can still enforce the assignment
- assignor is liable for breach
what does it mean for INVALIDATION for assignment
takes away BOTH the right to assign and the power to assign
- so there is a breach by the assignor AND no rights to assigne
can an assignee enforce INVALIDATION for assignment
NO
- takes away both the right to assign and the power to assign
ex of INVALIDATION of assignment
“all assignment of rights under this K are VOID
ex: of prohibition of assignment
“rights hereunder are not assignable” does not take away the power to assign
if in doubt b/w prohibition or invalidation which to choose
prohibition
if there is nothing in K regarding assignability what is the rule under CL:
even if a K does not any way limit right to assign
CL: BARS an assignment that SUBSTANTIALLY CHANGES the duties of the obligor
even if there was no langue limit assingmnet when under CL is it bared
if assingmnet SUBSTANTIALLY CHANGES the duties of the oblgior
does an assignment right to pay under CL substantial change the duties of obligor
NO!!!!
- assingment of the right to pay for a CL is never a substantial change for obligor
under CL what substantially changes obligors right
assignment of right to K performance OTHER THAN right to payment usually
is consideration required or assignment of right
GR NO: consideration is NOT required
can gratutious assignments be revoked
gratutious assignments (and only gratutious assignments( can be revoked
whom can sue whom under assignment of writes
1) assignee can recover from obligor
2) assignor for CONSIDERATION CANNOT recover from obligor
3) obligor has same defense against assignee as it would against assignor
4) payment by obligor to assignor is effective UNTIL obligor knows of payment
5) implied warranties of assignor is an assignment for consideration
can an assignee recover from an obligor if there was an assignment of rights
YES
can an assignor FOR CONSIDERATION recover from the obligor
NO
1) assignment is a TRANSFER
2) that means assignor HAS NO MORE RIGHTS
3) assignment for consideration CANNOT be revoked
can an assignment for consideration be revoked
NO
payment by obligor to assignor effective until when
until Obligor KNOWS of assignment
are modification agreements b/w obligor and assignor effective if the obligor did not know of the assignment
YES
what are the implied warranties of assignor in an assignment for CONSIDERATION
1) the right assigned actually exists
2) right assigned is not subject to then existing defenses by the obligor
3) the assignor will do nothing after the assignment to IMPAIR the value of the assignment
does the implied warranties of assignor in an assignment for CONSIDERATION warrant that obligor will not do anything after assignment
NO
what to look for with multiple assignments
more than 3 names
what is the rule for multiple assignments for GRATUITOUS assignments
GR: LAST assignee generally wins
- can make gift assignments w/o consideration
- can revoke assignment at anytime, therefore the next assignment is treated as revocation of previous assignment
what is the GR for multiple assignments for CONSIDERATION
FIRST assignee for CONSIDERATION wins
does the amount of consideration ever matter in K law
NO
what is the X/C for multiple assignments for CONSIDERATION (where GR is 1st assignee for consideration wins)
a subsequent assignee takes priority over an earlier assignee for a value only if he BOTH 1) does not know of the earlier assignment and 2) is the first to obtain (a)payment. (b) a judgment (c) a novation OR (d) indicia of ownership - will hardly ever work -
In K law, does 1st to notify ever matter?
NO
what is a delegation
is the transfer by a party to a K of his DUTIES or burdens under the K to a 3rd party who was not a party to K
what is the difference b/w assignment and delagation
1) assignment transfer of his RIGHTS or BENEFITS to 3rd party
2) delegation transfers DUTIES to 3rd party
generally which duties are delegable
GR: contracutal duties are delegable
limitations where duties ARE NOT delegable
1) K prohibits delegation OR assignments OR
2) PERSONAL services contracts that call for VERY SPECIAL SKILLS
when are personal service contracts not delegable
when the PERSONAL service K is for VERY SPECIAL SKILL
- very very limited
what if after delegation, the 3rd party delegatee does not perform, is the delegating party remain liable?
Yes. DELEGATING PARTY ALWAYS REMAINS LIABLE
does a delegating party always remain liable
YES
what if after delegation, the 3rd party delegatee does not perform, when is a delegatee liable
delegatee is ONLY IF they received CONSIDERATION from delegating party
what is the rule for a delegating party and their liability if 3rd party does not perform
ALWAYS REMAIN LIABLE
3 times when 3rd parties rights vest
1) when 3rd party learns of K and assents to it
2) when 3rd party learns of K and relies upon it
3) when 3rd party learns of right and sued on K