Part E--Rights, Duties, etc. Flashcards
Assignment
Transfer of a right to receive performance
Also can be used as catch-all–“assignment” of contract includes duties too
Parties involved in Assignment vs. Delegation
Assignment: obligor, assignor, assignee
Delegation: Obligee, obligor/delegator, delegatee
Assignor
Party that assigned right to get performance to someone else
Obligor
Party with obligation to perform
Assignee
Party right was assigned to–now has right to get performance
Requirements for Assignment
1) Original right holder manifests intention to presently transfer right currently has without any further action required
AND
2) Assignee manifests assent
Exception to Assent Req. for Assignment
1) Consideration given for assignment/right
OR
2) Assignment irrevocable by virtue of delivery of writing
Non-Assignable
1) Materially alter risks or obligations of person w/ duty to perform (obligor)
2) Obligor has personal interest in rendering performance to obligee specifically (ex. perform personal services,(ex. photography) for someone other than obligee)
3) Law or Public Policy
4) Prohibited by contract (must be explicit/clear–strict construction)
Remedies for assignment against contract
Breach damages–but not removal of duty to perform
Clause barring “assignment of the contract” (verbatim) =
1) Bar delegation of duties
2 DOES NOT bar assignment of rights
3) N/A re: rights assignor (person w/ original right) gets only if obligor (person w/ duty) breaches contract
4) N/A re: rights assignor (person w/ original right) gets upon complete performance of assignor’s duty (ie if I do x performance, I get z right)
5) Clause can be used as defense by person w/ performance responsibility but not by assignor when assignee sues
Assignment v. Delegation
Assignment = rights
Delegation = duties
Assignment for Value
Person getting rights (assignee) provides consideration
Valid vs obligor (person w/ duty)
Revocation of assignment for value
Assignor (person assigning) can’t revoke
Can modify (+ presumably revoke) w/ consent of all parties
Gratuitous Assignment
Assignor gives contract rights without consideration
Binding against obligor (person w/ duty)–no consideration req.
Revocation of gratuitous assignment
CANNOT REVOKE IF:
1) law of gifts–donative intent AND delivery
2) Payment of obligation made to assignee (becomes binding)
3) Estoppel–reliance of assignee (person getting rights) to his/her detriment
Right of setoff
Fill in once figure out what right of setoff is
Can obligor preemptively waive ability to invoke defenses v. potential assignee?
Yes, EXCEPT
1) “Real defenses” (ex. i) infancy’ ii) incapacity; iii) fraud; iv) duress if prevents capacity to consent; v) bankruptcy; vi) discharge of duties assignee has reason to know of
2) Obligor is buyer or lessee of commercial goods
Assignor (person bestowing right) warrants that
1) No knowledge of fact reducing value of assignment + won’t act to do so
2) Right actually exists + no hidden non-apparent limitations or defenses
3) If got assignee to sign b/cause gave writing talking about the rights, writing genuine (ex. I have right to collect, see, here’s the contract)
Rights of Assignee v. Obligor (person w/ duty)
“Steps into shoes” of person w/ orig. right–same rights and same vulnerability to defenses
Rights of Assignee v. Assignor (person giving right)
-Implicit warranties true
-Won’t give same right to multiple assignees (prior or subsequent)
Successive Assignees–Majority
Assignor liable to both assignees–but
if assignor bankrupt or fled, first person to get assigned right gets it if both demand from obligor (person w/ duty)
Successive Assignees–Minority
Generally 1st in time, but 2d in time gets if
1) Got payment from person w/ duty OR
2) Got judgement on debt OR
3) Makes own new contract with obligor (person who owes duty) OR
4) Contract requires assignor deliver x token/writing + got
Non-Delegable
1) Performance is personal AND recipient relies on the exercise of the other person personal qualities, like judgement, skill, character, reputation, taste (even if duty delegated to someone else who is also talented)
2) Contract bars delegation
“Contract” “assigned” to another
Generally–assume person has both assigned all rights and delegated all duties (unless non-assignable/non-delegable)
Assignment in violation of contract
= breach of contract and can sue for damages–but doesn’t relieve the obligor/person w/duty’s performance obligation to assignee
Article 2 UCC “real defenses”
1) Infancy,
2) Other incapacity that voids contract
3) Fraud
4) Duress/no capacity to contract
5) Bankruptcy
6) Other discharge assignee has reason to know of
Delegation
Agreement to transfer performance obligation owed–third party agrees to satisfy
Rights of Obligee (person to whom duty owed) v. Delegator
Original delegator still has duty to perform + liability, despite delegation of duty
Exception: novation
Novation
Cancels duty of delegator/original person w/ duty in favor of delegatee
MUST HAVE: clear promise by obligee/person to whom duty owed that releasing delegator in return for the liability of delegatee
Duty of Delegatee to Delegator
Liable to delegator if fail to perform delegated duty
Duty of Delegatee to Obligee (right holder)
Liable to obligee as well as delegator because obligee third-party beneficiary
Delegation in violation of contract
Enforceable breach–and can enforce requirements of contract
Delegation of non-delegable duty
Common law = attempt –> Immediate breach, immediate right to sue
Delegation of duty (UCC)
Any delegation of performance can be reasonable grounds for insecurity–other party has right to demand adequate assurances from assignee, without affecting his rights against the original party
