Assignments and Third Party Beneficiaries

Question 1

assignor vs assignee

Answer 1

assignor - one who assigns a right

assignee - one to whom a right is assigned

Question 2

obligor vs obligee

Answer 2

obligor - one who owes an obligation

obligee - one to whom an obligation is owed

Question 3

delegator vs delegatee

Answer 3

delegator - one who delegates a duty

delegatee - one to whom a duty is delegated

Question 4

no consideration is needed for a valid assignment

Answer 4

– gift assignments are permitted

Question 5

gift assignments are revocable by the assignor UNLESS

Answer 5

the assignee collects from the obligor

the assignee obtains a judgement against the obligor

or

the assignee is given the indicia by the assignor

Question 6

indicia

Answer 6

promissory note, motor vehicle certificate or title, certificate of deposit

embodiment of right, legal document

Question 7

the general rule is that assignments

Answer 7

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

Question 8

if a particular statute or ordinance requires an assignment to be in writing

Answer 8

the assignment must be in writing

Question 9

the early common law originally prohibited

Answer 9

assignments, as it was believed that a contract was personal between the parties and thus not capable of being assigned.

Question 10

courts of equity began enforcing assignments

Answer 10

on a case by case basis. the enforcement became so prevalent, that today contract rights are completely assignable

Question 11

exceptions to assignability of rights

Answer 11

the following rights are not assignable:

1. assignments of rights
2. assignments of rights that materially increase the risk or burden on the obligor
3. assignments where the contract between the parties expressly prohibits assignments
4. assignments prohibited by law

Question 12

assignments of rights

Answer 12

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)

Question 13

assignments of rights that materially increase the risk or burden on the obligor

Answer 13

e.g. assignment of an automobile insurance policy or assignment of an obligation to pay which involves credit terms

Question 14

assignments where the contract between the parties expressly prohibits assignments

Answer 14

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

Question 15

assignments prohibited by law

Answer 15

some states prohibit wage assignments, while others cap the amount of wages that may be assigned

Question 16

general rule for assignments

Answer 16

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

Question 17

the following warranties are made by an assignor only when value (i.e. consideration) is given for the assignment

Answer 17

1. that he will do nothing to defeat or impair the assignment
2. 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
3. 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
4. that the assignor has no knowledge or any fact that would impair the value of the assignment

Question 18

do gift assignments have warranties?

Answer 18

no

Question 19

implied warranties

Answer 19

are imposed by law upon the transfer of rights for value

do not apply to gift warrants

Question 20

an express warranty

Answer 20

may also be made by the assignor

do not exist unless specifically made or created (made through either oral or written words)

Question 21

partial assignments

Answer 21

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

Question 22

successive assignments of the same right

Answer 22

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

Question 23

delegation of duties

Answer 23

is generally permitted, however, the following are not delegable

1. the nature of the duties is personal in that the obligee has a substantial interest in having the delegator perform the contract
2. the performance of the contract is expressly made or nondelegable
3. the delegation is prohibited by statute or public policy

Question 24

the delegator remains liable on the delegated duty

Answer 24

unless there is a novation (new contract) involving the delegator, delegatee and obligee

Question 25

donee beneficiary

Answer 25

purpose of naming beneficiary is to make a gift to him (beneficiary in life insurance policy or payable on death beneficiary on bank account)

Question 26

creditor beneficiary

Answer 26

promisee intends the performance of the promise to satisfy a duty which he owes to the creditor/beneficiary

Question 27

test for third party beneficiary

Answer 27

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

Question 28

incidental beneficiary

Answer 28

the beneficiary would only incidentally benefit

no court enforces the rights of an incidental beneficiary

Question 29

do courts enforce the rights of third party beneficiaries?

Answer 29

donee and creditor yes

incidental no