IX. Rights and Duties of 3P to the K

Question 1

Who is a 3P beneficiary

Answer 1

• Intended v. inceidental
  
  • only intended have contractual rights
  • To detrmine consdier whether 1) id’d in K; 2) receives performance directly from promisor; aor 3) has some relationship w/ promisee to indicate intent to benefit
• Two types of intended beneficiaries:
  
  • Creditor:–preson whom a debt is owed by the promisee
  • Donee: person whom the promisee intends to benefit gratuitously

Question 2

When do the rights of beneficiary Vest

Answer 2

• Can only enforce once vested
  
  • 1) when he manifests assent to a promise in the manner requested by parties; 2) brings a suit to enforce a promise; OR 3) materially changes position in justifable reliance on promise
• prior to vest, may change rights of beneficiary. Post-only with consultation with 3P

Question 3

What are the reights of the 3PB and the PRomisee

Answer 3

• vs. promisor–may sue on contract. If promise absolute, may not raise defenses of promisee. If not absolute, may raise those defenses
• V. promisee: creidtor beneficiary can sue the promisee on existing obligation.
• Promisee v. Promisor: if not performing for 3P

Question 4

Assignment

Answer 4

X contracts for Y to perform service. Y assigns Service to Z

Question 5

What rights may be assigned

Answer 5

All may be assigned EXCEPT

• 1) one that would substantially change the obligor’s duty of risk (personal service where service is unique, requirement and output K)
• 2) an assignment of future rights to arise from future K
• and 3) an assignment prohbitied by law (wage assignments)
• Express Provision agaisnt assignment
  
  • against contract: only the assignor’s duties
  • Contractual rights: does not bar but gives chance to sue for damages
  • Voidable for assignment: can bar assignment
    *

Question 6

Effect of Assignment

Answer 6

Establish privity of K b/w obligor and assignee while extinguishing privity b/w obligor and assignor

Question 7

What is necessary for effective assignment

Answer 7

Manifiest inent to immeaditely and completely transfer writes

Usually no writing

duty must be adequately desrcibed

Consideration not requried

Question 8

Is assignment revocable or irrevocable

Answer 8

• Assignments for Value: 1) done for consdireation or 2) taken as a security or payment for preexisting debt. CANNOT BE REVOKED
• Gratuitous Assignments: generally revocable
  
  • Exceptions: 1) obligor already perfomred; 2) a token chose is delivered; 3) an asiggnment of a simple chose (intangible cliam such as K right or stock certificate); OR 4) assignee can show detrimental reliance
  • Method to revoke: 1) death or bankruptcy of assignor; 2) notice of revocation; 3) asisgnor taking perofmance directly from obligor; or 4) subsequent assignment of same right by assignor to another
  • Once revoked, privity restored between assignor and obligor

Question 9

Rights and Liability of paties in Assignment relationshp

Answer 9

• assignee v. obligor: can sue. Obligor cannot raise denfesnse that at assignor might have against asignee
• Assignee v. assignor: in every for value, assignor warrants that 1) he has not made a prior assignment; 2) right exists and is not subject to any undisclosed defense; 3) and will not interfere. May sue for any breach of these warranties. WIll not be lieable to the assignee if obligor is incapable of performing
  *

Question 10

Problems if successive assignments of same rights

Answer 10

First assignment wil lusaully prevail over subsequent EXCEPT:

1) subsequent assignee gets first judgment
2) gets first payment of claim for obligor
3) gets delivery of token chose
4) party to a novation releasing assignor OR
5) cna proceed against first on estoppel

Question 11

What duties may be delegated

Answer 11

All duties EXCEPT

• involve personal jdugment or skill
• change obligee’s expectancy
• special trust was reposed in the delgator
• and there is contracutla restriction on delegation

Question 12

What is necessary for delegation

Answer 12

msut manifest present intention to make a delegation

No formalities

Question 13

Rights and liabilities under delegation

Answer 13

must accept perofrmance.

Delegator remains liable.

Obligee may sue the delegate for nonperofrmance but can rewquire perofom only if there has been an assumption (supported by consdieation)

Creates promises b/w delgator and delgate in which obligee is 3P beneficiary

Question 14

Novation distinguishes

Answer 14

substitutes a party to the original K. Requires assent of all involved parties