Do any third parties have rights and/or obligations under the contract?

Question 1

Third party beneficiary

Answer 1

not a party to original contract but who is directly affected by contract

Question 2

Intended third party beneficiary

Answer 2

Parties intend for person to be third party beneficiary and either

1. performance will satisfy obligation of promisee to pay third party beneficiary or
2. circumstances indicate promisee intends to give third party beneficiary the benefit of a promised performance

Question 3

What kind of third party beneficiary has contract rights?

Answer 3

Intended

Question 4

What kind of third party beneficiary doesn’t have contract rights?

Answer 4

Incidental

Question 5

What are the roles when there is an intended third party beneficiary?

Answer 5

1. third party intended beneficiary
2. promisor
3. promisee

Question 6

What is a promisor? To what type of third party contract does she relate?

Answer 6

person making promise that will run to benefit of third party promisee
(third party beneficiary)

Question 7

What is a promisee?

Answer 7

person who obtains promise that will later benefit third party promisee
(third party beneficiary)

Question 8

What kind of third party is included at the time of contracting?

Answer 8

Third party beneficiary

Question 9

What is an assignee? To what type of third party contract does she relate?

Answer 9

Third party who has been transferred rights

assignment

Question 10

What is an assignor? To what type of third party contract does she relate?

Answer 10

Party who transferred away rights

assignment

Question 11

What is an obligor? To what type of third party contract does she relate?

Answer 11

Party with duty to perform rights

assignment

Question 12

What is a delegate? To what type of third party contract does she relate?

Answer 12

Party to whom duty has been transferred

delegation

Question 13

What is a delegator? To what type of third party contract does she relate?

Answer 13

Party delegating his duty to someone else

delegation

Question 14

What is an obligee? To what type of third party contract does she relate?

Answer 14

Party with right to receive benefit

delegation

Question 15

When do a third party beneficiary’s rights become enforceable?

Answer 15

When rights vest

Question 16

When can a third party beneficiary’s rights be changed/discharged?

Answer 16

By subsequent agreement of promisor and promisee until vested

Question 17

When do a third party beneficiary’s right vest?

Answer 17

Third party beneficiary either

1. manifests assent as requested or
2. brings suit upon contract or
3. relies on contract

Question 18

In a third party beneficiary contract, who can the third party beneficiary sue?

Answer 18

Only if there is a binding, enforceable contract, can sue

1. Breaching promisor or
2. Promisee only if credit beneficiary

Question 19

Creditor exception

Answer 19

Third party beneficiary can only sue breaching party if she was a creditor beneficiary = she was already owed money before/outside of contract

Question 20

Successive sales of mortgaged property

Answer 20

Original mortgagor sells mortgaged property

Question 21

In a mortgaged property contract, what are the two possibilities for purchaser?

Answer 21

1. Assumes debt by promising mortgager to pay it

2. Takes property “subject to” mortgage by allowing mortgagee to possess security interest in property

Question 22

In a mortgaged property contract, when is the purchaser personally liable for mortgage payments?

Answer 22

When she assumes debt by promising mortgagor to pay it

Question 23

In a mortgaged property contract, when is the purchaser not personally liable for mortgage payments?

Answer 23

When she takes property “subject to” mortgage by allowing mortgagee to possess security interest in property

Question 24

Assignment

Answer 24

transfer of contract right

Question 25

Assignable rights

Answer 25

any right that does not substantially change duties of obligor

Question 26

Unassignable rights

Answer 26

any right that substantially changes duties of obligor

Question 27

What is an example of an assignable right?

Answer 27

right to pay money

Question 28

What is an example of an unassignable right?

Answer 28

performance (of service) rights

Question 29

Who can the assignee sue?

Answer 29

Obligor

Question 30

When are assignments or delegations acquired?

Answer 30

After formation

Question 31

Can delegates collect payment?

Answer 31

No, not without accompanying assignment of right

Question 32

When are duties not delegable?

Answer 32

Generally delegable except when

1. contract prohibits delegation
2. other party has special interest in particular obligor
3. obligor has special reputation/skills

Question 33

When is a delegator liable?

Answer 33

Always

Question 34

When is a delegate liable?

Answer 34

Never, unless he’s receiving consideration