Other Third Party Issues

Question 1

assignment

Answer 1

transfer of rights under k to a 3P after k is formed
- assignor assigns rights under k to assignee who is now in a k w/ obligor
- assignor can only transfer rights they ahve in k @ time of assignment

ET: 2 steps - OG k THEN assignment

Question 2

assignor

Answer 2

party that assigns rights under k to 3P

Question 3

assignee

Answer 3

3P who gets assignor’s rights under 3P
- NOT OG party to k

NOTE: can enforce rights against party who ows duty (obligor)

Question 4

obligor

Answer 4

remaining OG party to assignment k
- now owes duties to assignee

Question 5

consideration & assignment

Answer 5

consideration is NOT required
- BUT, assignment w/out consideration is considered gratuitous (but still ok to do)

Question 6

common law limitations to assignment

Answer 6

CL bars any assignment that substantially changes the duties of the obligor
- assignment of payment is NOT a substantial change (usually NOT money)
- assignment of rights fails if the obligor’s risk is substantially altered

Question 7

valid assignment

Answer 7

language of present transfer
- Present tense ONLY to be valid (eg, “I assign”)
- NOT promise to assign (eg, “I will assign”)

Question 8

K limitations on assignment

Answer 8

Ks may contain non-assignment clauses:
1. Non-assignment of K: bars delegation of assignor’s duties only (ie, does NOT prohibit assignment of rights)
2. Non-assignment of rights: bars right to assign, but NOT the power to assign (ie, upon assignment, obligor may sue assignor for breach)
3. Assignment as void: assignment will be ineffective (ie, assignor has neither power nor right to assign)

k’s language controls

Question 9

ET: restrictions on assignments

Answer 9

1. Prohibition: assignments NOT permitted
   - assignment w/out knowledge can still collect BUT OG party breached
2. Invalidation: assignments null and void
   - assignee CANNOT collect

**ET: assume prohibition if unclear

Question 10

revocability of assignments

Answer 10

gratuitous assignments may be revocable BUT assignments made for consideration are irrevocable
- Assignments for consideration: irrevocable
- Gratuitous assignments: revocable

gratuitous assignment = assignment made w/out consideration

Question 11

gratuitious assignments revocability exceptions

Answer 11

gratuitous assignment is irrevocable if either:
1. obligor has already performed,
2. assignee has received a written claim or tangible object signifying a right to collect (eg, stock certificate), or
3. detrimental reliance by assignee (ie, estoppel)

Question 12

line of gift assignments

Answer 12

last gratuitous assignee wins
- later gift revokes previous assignment
- BUT 1st assignee for consideration wins against ALL subsequent assignee AND previous gift assignees UNLESS later subsequent assignee for consideration doesn’t know about previous and enforces first (does NOT need to notify)

Remember: asignee can recover from obligor directly

Question 13

asginee right to sue

Answer 13

assignee can sue:
1. obligor: for non-performance
- obligor can raise any defense to k that he could have raised against assignor (+ obligor must be aware of assignee)
2. assignor: for breach of any of the following assignor’s implied warranties
- no prior assignment of same right
- the right to assign was not subject to defenses
- no interference w/ assigned right

Question 14

delegation

Answer 14

one party unilaterally finds replacement party to perform (even without other obligee’s consent)
- occurs when one party to a K delegates the duties she owes to another party to the K to a third party

OG party’s obligations NOT excused

Question 15

delegator

Answer 15

the party who unilaterally delegates her duties to a third party

Question 16

delegatee

Answer 16

the third party who assumes the delegator’s duties

Question 17

obligee

Answer 17

the other OG party to the k (the one who did not delegate)

Question 18

delegation notes

Answer 18

1. obligee must generally accept performance from delegation
2. only duties may be delegated (transfer of work NOT rights)

Question 19

delegation liability

Answer 19

1. delegator remains liable for delegatee’s performance (OG party’s obligations NOT excused)
2. obligee may sue delegator for non-performance by delegatee
3. obligee may only sue delegatee if delegatee has assumed duties of entire k

delegating party always liable to obligee

Question 20

delegation for consideration

Answer 20

party is liable
1. to both parties
2. created intended TPB obligations to obligee

Question 21

delegation exceptions

Answer 21

duties are non-delegable if:
1. duties involve personal judgment or special skill,
2. delegation materially changes obligee’s expectancy under k
3. the k prohibits delegation, or
4. prohibited by statute or public policy

Question 22

k language limitations to delegation

Answer 22

• “prohibtion against delegations” = NO delegations allowed
• “no assignments” = no delegations

Question 23

delegation v. assignment

Answer 23

• delegation: transfer of OG’s duties to 3P
• assignment: transfer of OG’s rights to 3P

Question 24

delegation v. novation

Answer 24

• novation: both parties agree that a substitute person will take over duties under k
• delegation: one party independently decides to delegate duties to 3P