Do any third parties have rights and/or obligations under the contract? Flashcards
Third party beneficiary
not a party to original contract but who is directly affected by contract
Intended third party beneficiary
Parties intend for person to be third party beneficiary and either
- performance will satisfy obligation of promisee to pay third party beneficiary or
- circumstances indicate promisee intends to give third party beneficiary the benefit of a promised performance
What kind of third party beneficiary has contract rights?
Intended
What kind of third party beneficiary doesn’t have contract rights?
Incidental
What are the roles when there is an intended third party beneficiary?
- third party intended beneficiary
- promisor
- promisee
What is a promisor? To what type of third party contract does she relate?
person making promise that will run to benefit of third party promisee
(third party beneficiary)
What is a promisee?
person who obtains promise that will later benefit third party promisee
(third party beneficiary)
What kind of third party is included at the time of contracting?
Third party beneficiary
What is an assignee? To what type of third party contract does she relate?
Third party who has been transferred rights
assignment
What is an assignor? To what type of third party contract does she relate?
Party who transferred away rights
assignment
What is an obligor? To what type of third party contract does she relate?
Party with duty to perform rights
assignment
What is a delegate? To what type of third party contract does she relate?
Party to whom duty has been transferred
delegation
What is a delegator? To what type of third party contract does she relate?
Party delegating his duty to someone else
delegation
What is an obligee? To what type of third party contract does she relate?
Party with right to receive benefit
delegation
When do a third party beneficiary’s rights become enforceable?
When rights vest
When can a third party beneficiary’s rights be changed/discharged?
By subsequent agreement of promisor and promisee until vested
When do a third party beneficiary’s right vest?
Third party beneficiary either
- manifests assent as requested or
- brings suit upon contract or
- relies on contract
In a third party beneficiary contract, who can the third party beneficiary sue?
Only if there is a binding, enforceable contract, can sue
- Breaching promisor or
- Promisee only if credit beneficiary
Creditor exception
Third party beneficiary can only sue breaching party if she was a creditor beneficiary = she was already owed money before/outside of contract
Successive sales of mortgaged property
Original mortgagor sells mortgaged property
In a mortgaged property contract, what are the two possibilities for purchaser?
- Assumes debt by promising mortgager to pay it
2. Takes property “subject to” mortgage by allowing mortgagee to possess security interest in property
In a mortgaged property contract, when is the purchaser personally liable for mortgage payments?
When she assumes debt by promising mortgagor to pay it
In a mortgaged property contract, when is the purchaser not personally liable for mortgage payments?
When she takes property “subject to” mortgage by allowing mortgagee to possess security interest in property
Assignment
transfer of contract right
Assignable rights
any right that does not substantially change duties of obligor
Unassignable rights
any right that substantially changes duties of obligor
What is an example of an assignable right?
right to pay money
What is an example of an unassignable right?
performance (of service) rights
Who can the assignee sue?
Obligor
When are assignments or delegations acquired?
After formation
Can delegates collect payment?
No, not without accompanying assignment of right
When are duties not delegable?
Generally delegable except when
- contract prohibits delegation
- other party has special interest in particular obligor
- obligor has special reputation/skills
When is a delegator liable?
Always
When is a delegate liable?
Never, unless he’s receiving consideration
