Third Parties Flashcards
(17 cards)
Do you incidental beneficiaries of contracts have rights?
No only intended beneficiaries of the contract have rights to enforce it? This is a question of fact
When can the contracting parties not cancel or modify the contract seeking to benefit a third party?
When the third party’s rights have vested
What counts as vesting for the purpose of a third-party enforcing their rights under a contract?
- The third-party land of the deal and relies on it
– third-party land of the deal and agrees to it
– third-party learns of the deal and immediately sues to protect the right
In order for a third party to sue under a contract that intends to benefit them is made knowledge of the contract sufficient to enforce their right?
No, the third party’s rights need to vest
Who can the third-party beneficiary recover from?
The third-party beneficiary can recover from the promisor or the promisee can recover from the promisor. However, the third-party cannot recover from the promisee
What defences made a promise or a search against the third-party who is suing him under the contract?
Any defences that the promisor would have had against the promisee
Where a contract provides language of PROHIBITION, stating that the rights are not assignable but party A still assigned their right to party C, what is the result?
Language of prohibition = breach by the assignor + assignment of the contract
Where a contract provides language of INVALIDATION, stating that the rights are not assignable but party A still assigned their right to party C, what is the result?
Language of invalidation = breach by assignor + no assignment of the contract
Where a contract is silent about the rights of assignability, under common-law what terms can be assignment not change?
Payment, and right of contract performance
Is gift assignment valid?
Yes, it does not require consideration, but a gift assignment can be revoked
What is the rule where and assignor makes multiple assignments as a GIFT?
Lost in time wins
What is the rule where and assignor makes multiple assignments for CONSIDERATION?
First in time wins
Subject to one exception: a subsequent assignee for consideration will take priority if he (1) does not know if the earlier assignment, and (2) is the first to obtain payment, a judgment, a novation or indicia of ownership
Are contract duties delegable if there is a no assignment clause?
If the contract prohibits assignment, then delegating duties will likely be barred
Can a personal services contract (involving special skills) be delegated?
No
Party A delegates their contractual duties to party C. Party C screws up the service and party B sues. Who is liable?
Party A because they are still liable under contract to party B.
Party A delegates their contractual duties to Party C and pays C consideration for their role. If Party C screws up the contract, who is liable now?
Party C
Regarding a third party contract, if the original parties modify the contract before the third party’s rights vest, agreeing to change the terms to no longer benefit the third party, what is the effect/can the third party sue?
The modification can effectively rescind the Third Party right and they’re no longer entitled to benefit
