Third Party Beneficiaries

Question 1

Novation

Answer 1

A novation occurs when

1) a new contract substitutes a new party to receive benefits and assume duties that had belonged to one of the original parties under the terms of an existing contract; AND
2) all parties must agree not only that the new party would assume the original party’s obligations, but also that the contractual duties between the original contracting parties are extinguished.

Question 2

Delegator

Answer 2

1) When a party to a contract delegates his duties to another, the original party (the delegator) remains liable on his contract.
2) This is so even if the delegate expressly assumes the delegator’s duties and the obligee agrees to the delegation.

Question 3

Modification

Answer 3

1) If a contract is subsequently modified by the parties, this will serve to discharge those terms of the original contract that are the subject of the modification.
2) Generally, a modifying agreement must be mutually assented to and supported by consideration