Third Parties Flashcards
When may a third party beneficiary sue a promisee?
When they are a creditor beneficiary (someone to whom the promisee owes something), or a donee beneficiary who detrimentally relied on the K
What defenses may the promisor assert against a third party beneficiary?
Any defenses the promisor has against the promisee, as well as any defenses the promisee has against the beneficiary if the beneficiary is a creditor.
When do the rights of third party beneficiaries vest?
1) When they manifest assent to the contract in a manner requested by the parties
2) When they sue to enforce their rights
3) When they have materially changed their position in justifiable reliance on the promise
When can an assignee sue an assignor?
When they are an assignee for value and the assignor breaches the warranty that (1) they have not previously assigned the right to anyone else (2) that the right exists and is not subject to undisclosed defenses and (3) that the assignor will not interfere with the assigned right
What are the rights of an obligee in a delegation situation?
The obligee must accept performance of the delegate, and may sue the delegator if the delegate fails to perform.
Can only sue the delegate if delegate has assumed the duties expressly/impliedly.
When is a delegation of duties not permitted?
1) When the duties involve personal judgement/skill
2) When delegation would change the obligee’s expectancy
3) When there is a special trust in the delegator reposed by the obligee
4) When the obligee has a special interest in who renders performance
5) When there is contractual language prohibiting delegation (no delegation or “no assignments”)
When is the beneficiary of a K considered an intended beneficiary?
When they are identified in the contract, when they receive performance directly from the promisor, and/or when they have a relationship with the promisee indicating intent to benefit them
When is a gratuitous assignment of contractual rights irrevocable?
When the obligor renders performance to the assignee, when a token chose is delivered, when an intangible claim is put in writing, or when the assignee detrimentally relies on the assignment
What are the methods by which a revocable assignment can be revoked?
By death or bankruptcy of the assignor, by the assignor accepting performance from the obligor, by the assignor making a subsequent assignment of rights, or by a notice of revocation
What are the elements of a valid novation?
A valid/enforceable K, an agreement between the parties, the immediate extinguishment of duties under the original K, and a valid and enforceable new K
What is required for a valid assignment?
Words of intent to immediately transfer K rights.
NOT consideration or writing
When does a delegate assume the duty to perform, such that an obligee may recover against them for failure to perform?
When the delegate makes an express or implied promise to perform supported by consideration
