Assignments and Third Party Beneficiaries Flashcards
assignor vs assignee
assignor - one who assigns a right
assignee - one to whom a right is assigned
obligor vs obligee
obligor - one who owes an obligation
obligee - one to whom an obligation is owed
delegator vs delegatee
delegator - one who delegates a duty
delegatee - one to whom a duty is delegated
no consideration is needed for a valid assignment
– gift assignments are permitted
gift assignments are revocable by the assignor UNLESS
the assignee collects from the obligor
the assignee obtains a judgement against the obligor
or
the assignee is given the indicia by the assignor
indicia
promissory note, motor vehicle certificate or title, certificate of deposit
embodiment of right, legal document
the general rule is that assignments
may be oral, however if the subject matter of the assignment falls within the statute of frauds, (such as an assignment involving an interest in land or assignment that is not capable of being fully performed within one year of its making) the assignment must be in writing
if a particular statute or ordinance requires an assignment to be in writing
the assignment must be in writing
the early common law originally prohibited
assignments, as it was believed that a contract was personal between the parties and thus not capable of being assigned.
courts of equity began enforcing assignments
on a case by case basis. the enforcement became so prevalent, that today contract rights are completely assignable
exceptions to assignability of rights
the following rights are not assignable:
- assignments of rights
- assignments of rights that materially increase the risk or burden on the obligor
- assignments where the contract between the parties expressly prohibits assignments
- assignments prohibited by law
assignments of rights
are highly personal (e.g. assigning your right to fight a particular boxer in a boxing match, or assigning your contract with a physician to perform brain surgery on you; assigning your right to marry someone or assigning your right to vote (the last two are prohibited by law)
assignments of rights that materially increase the risk or burden on the obligor
e.g. assignment of an automobile insurance policy or assignment of an obligation to pay which involves credit terms
assignments where the contract between the parties expressly prohibits assignments
note, however, that the courts construe thus as a breach of a promise not to assign and generally allow the assignment. the party who wrongfully assigned will be liable for any damages caused by the obligor by the wrongful assignment
assignments prohibited by law
some states prohibit wage assignments, while others cap the amount of wages that may be assigned
general rule for assignments
except as stated above, the assignee is said to stand in the shoes of the assignor and has all of the rights of the assignor as well as being subject to all defenses that could be asserted against the assignor
the following warranties are made by an assignor only when value (i.e. consideration) is given for the assignment
- that he will do nothing to defeat or impair the assignment
- that the assigned right actually exists and is subject to no limitations or defenses other than those stated or apparent at the time of the assignment
- that any writing evidencing the right delivered to the assignee or exhibited to him as an inducement to accept the assignment is genuine and what it purports (appears) to be
- that the assignor has no knowledge or any fact that would impair the value of the assignment
do gift assignments have warranties?
no
implied warranties
are imposed by law upon the transfer of rights for value
do not apply to gift warrants
an express warranty
may also be made by the assignor
do not exist unless specifically made or created (made through either oral or written words)
partial assignments
assignor gives fractional amounts of the right to two or more assignees
if the obligor does not perform, all of the partial assignees are required to join as plaintiffs or if one or more refuse to join in the lawsuit, they can be named as defendants
successive assignments of the same right
assignor assigns the entire right to two or more assignees
the majority rule is that the first assignee in point of time prevails over subsequent assignees unless a subsequent assignee collects from the obligor, gets a judgement against the obligor, or receives the indicia
the minority rule is that the first assignee to give notice to the obligor prevails
same exceptions as gift assignments apply
delegation of duties
is generally permitted, however, the following are not delegable
- the nature of the duties is personal in that the obligee has a substantial interest in having the delegator perform the contract
- the performance of the contract is expressly made or nondelegable
- the delegation is prohibited by statute or public policy
the delegator remains liable on the delegated duty
unless there is a novation (new contract) involving the delegator, delegatee and obligee
donee beneficiary
purpose of naming beneficiary is to make a gift to him (beneficiary in life insurance policy or payable on death beneficiary on bank account)
creditor beneficiary
promisee intends the performance of the promise to satisfy a duty which he owes to the creditor/beneficiary
test for third party beneficiary
if a promise which the promisor makes to the promisee would satisfy a duty, which the promisee owes to his creditor, the creditor is a third party beneficiary of such promise
incidental beneficiary
the beneficiary would only incidentally benefit
no court enforces the rights of an incidental beneficiary
do courts enforce the rights of third party beneficiaries?
donee and creditor yes
incidental no
