Third-Party Beneficiaries

Question 1

Who is the promisor?

Answer 1

the person making the promise that the outsider is trying to sue to enforce.

Question 2

Who is the promisee?

Answer 2

A contractual counterparty to that promise; this person could presumably enforce the promise but is not doing so.

Question 3

Who is the third-party beneficiary?

Answer 3

The outsider suing the promisor.

Question 4

Who has the right to sue in a third party beneficiary contract?

Answer 4

• Intended beneficiaries have the right to sue.

* incidental beneficiaries do not.

Question 5

What is a creditor beneficiary?

Answer 5

Arises with the promisee strikes a deal with the promisor in order to repay some earlier date to the third party.

• this is a common fact pattern on the bar exam
• Can sue on the contract

Question 6

What is a donee beneficiary?

Answer 6

Arises when there’s no pre-existing obligation, but the promisee clearly into the ticket for a gift of enforcement on a third-party.

• can Sue on the contract.

Question 7

Can the initial counterparties revoke or modified away the third parties right to enforce the contract?

Answer 7

Depends on whether the third-party knows about the promise and has changed her position in reasonable reliance on the promise.

• if so, the third-party may be able to make out a claim under promise Promissory estoppel.

Question 8

When will a third-party not lose enforcement right?

Answer 8

• The beneficiary detrimentally relies on the rights
• The beneficiary manifest assent to the contract/the rights or
• The beneficiary thousand lawsuit to enforce the contract.

¥ The promisor can assert any contract defense against the third-party that he would be entitled to assert against the promisee.

Question 9

What is an assignment?

Answer 9

The transfer of rights under a contract.

Almost all contractional benefits can be assigned, in whole or in part.

Question 10

What is a delegation?

Answer 10

The transfer of duties under a contract.

Question 11

If the contract states that rides or not assignable, you need to decide whether the contract invalidates assignment. What does this mean?

Answer 11

• if the contract just prohibits assignments, then the third party has breached the deal when he makes the assignment, but the third-party can still recover from the grantor.
• if the contract invalidates assignments, then the third-party cannot recover (because there is no power or right to assign)

¥ look for the word void.

Question 12

What happens if someone decides the right twice?

Answer 12

• if the rights are assigned without consideration, then the last assignment controls.
• if the rights are assigned for consideration, then the first assignment for consideration will typically hold.

Limited exception: a later assignment will take priority if the second assignee does not know of the initial assignment and is first to obtain payment or a judgment.

Question 13

Is a delegatee liable for breach?

Answer 13

No unless she received some consideration from the delegating Party.