Third Party Beneficiaries Flashcards

1
Q

Incidental v. Intended Beneficiaries

A

ONLY intended beneficiaries have K rights.

To determine if intended beneficiary courts consider whether 3rd party:

  1. Is identified in the K
  2. Receives performance directly from the promisor
  3. Has some relationship with the promisee to indicate intent to benefit
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2
Q

Creditor v. Donee Beneficiary

A

Both intended beneficiaries.

Creditor - person to whom debt is owed by promisee.

Donee - person who the promisee intends to benefit gratuitously

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3
Q

What is the significance of vesting?

A

Prior to vesting, parties can modify/cancel K without consent of the 3rd party.

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4
Q

When do the rights of the beneficiary vest?

A
  1. 3rd party beneficiary manifests assent to K,
  2. 3rd party beneficiary files suit to enforce, or
  3. 3rd party materially changes position in reliance on the promise
    Exception: Contractual language can still allow 3rd parties rights to be terminated, despite above rule. Ex. Insurance policy that allows a change in beneficary
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5
Q

Who can sue?

A
  1. Beneficiary v. Promisor- Can sue promisor on K. Promisor can raise any defense that the ptormisor has agains the promisee.
  2. Promisee v. Promisor - can sue both at law and in equity for SP if promisor not performing

Beneficiary CANNOT recover from promisee.
***Exception: if beneficiary is creditor, can recover original debt from promisee

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6
Q

Vocabulary

A
  • Promisor - person who is to render performance that benefits the 3rd party
  • Promisee - person who OBTAINS the promise for the 3rd party
  • 3rd party beneficiary - person who gets benefit
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7
Q

Assignments that Must be in Writing

A
  1. Wage assignments
  2. Assignments for interest in land
  3. Assignments of right to sue for more than 5k
  4. Assignments intended as security interests under Article 9
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