Third-Party Beneficiaries

Question 1

Intended Beneficiaries (Elements)

Answer 1

(1) Recognition of a right to performance is appropriate to effectuate the intention of the parties
(a) Performance of the promise will satisfy an obligation to pay money to B
(b) Circumstances indicate the promise intends to give B the benefit of the promised performance

Question 2

Vesting Third-Party Interests

Answer 2

• Position materially changes in reliance on the promise (estoppel)
• B brings suit regarding the benefit/promise
• B manifests assent to the agreement upon request from one of the contracting parties

Question 3

Scope of Third-Party Beneficiaries

Answer 3

No requirement for identification of the beneficiary before attempted enforcement

B’s rights are subject to the validity of the agreement

B’s benefit may be modified unless B’s position materially changes upon reasonable reliance on the promise (estoppel)

Question 4

Assignment (Generally)

Answer 4

Rights under a contract may be assigned

Question 5

Delegation (Generally)

Answer 5

Delegation of duties

Question 6

Scope of Assignment

Answer 6

Assignments can be freely done unless . . .

• Substitution would materially change the duty of the obligor; materially increase the burden or risk imposed; materially impart the chance of obtaining return performance; or materially reduce its value to the obligor
• Forbidden by statute; otherwise prohibited on grounds of public policy
• Assignment validly precluded by contract

Question 7

Scope of Delegation

Answer 7

Duties may be freely delegated unless . . .

• Delegation is contrary to public policy
• Delegation violates the terms of the promise
• Obligee has a substantial interest in having the original person perform or control the acts promised

Question 8

Novation (Defined)

Answer 8

Substituting an original agreement with a new contract

Question 9

Surety (Defined)

Answer 9

To take responsibility for the debt, default, or other financial responsibilities of another person