Third parties, assignments, and delegation

Question 1

Intended Beneficiary

Answer 1

Someone the initial parties intended to convey enforcement rights to (usually named in contract in some way) (can sue)

Question 2

Incidental beneficiary

Answer 2

someone who isn’t really involved, even if they are impacted (can’t sue)

Question 3

Creditor Beneficiary

Answer 3

promisee strikes a deal with promisor to pay the earlier debt of a third party

Question 4

Donee Beneficiary

Answer 4

no preexisting obligation exists, but the promisee clearly intends to confer a gift of enforcement on a third party (life insurance)

Question 5

Can the original parties revoke/modify away the 3rd party’s rights?

Answer 5

Yes, UNLESS the right has vested:

1. beneficiary detrimentally relies on the rights
2. Beneficiary manifests assent to the contract/rights
3. Beneficiary files a lawsuit acting on their rights

Question 6

Assignment

Answer 6

transfer of rights/benefits (who receives the money)

Question 7

Delegation

Answer 7

transfer/”outsourcing” of duties (who has to do the performance)

OK unless K prohibits it or there is something special about the person who was supposed to perform

Question 8

If a contract states rights are NOT assignable

Answer 8

Need to determine whether it PROHIBITS or INVALIDATES

1. Prohibits - assignment is a breach, but third party can still recover
2. Invalidates - third party cannot recover

Question 9

What if someone assigns the same rights twice?

Answer 9

1. If assigned without consideration - last assignment controls
2. If assigned WITH consideration - first assignment controls (unless the second assignee doesn’t know of the initial assignment and is the first one to pay for the consideration)

Question 10

Who is on the hook for breach if a delegation has occurred?

Answer 10

The original party!

Question 11

Can the delegator sue the delegatee if there is a breach?

Answer 11

Only if there was consideration for a delegation