Third Party Beneficiaries; Assignments Flashcards
May a contract to manufacture limited edition plates be delegated to a third party?
Yes, because all contractual duties can be delegated unless they fall within a recognized exception.
An actors contract with his agent CANNOT be assigned because
because it is a personal services contract that involves unique services.
The general rule is that when the assignor makes two assignments of the same right, if the first assignment is ____________, the ____________ assignee has priority.
irrevocable; first
The rights of a third-party beneficiary vest when he:
Manifests assent to the promise; brings suit to enforce the promise; or materially changes position in justifiable reliance on the promise
Once the third-party beneficiary’s rights have vested, the promisor and promisee cannot
vary his rights without consent.
In determining the promisee’s intentions in a third-party beneficiary situation, courts will consider
1) Whether the third party is expressly designated in the contract; 2) Whether performance is to be made directly to the third party; 3) Whether the third party has any rights under the contract; and 4) Whether the third party stands in such a relationship to the promisee that one could infer that the promisee wished to make an agreement for the third party’s benefit.
If an assignee discovers that the assignor had previously assigned the same contract rights to another party for value, the assignee may sue the assignor for breach of warranty only if:
the assignee’s assignment was for value.
The warranty that the assignor has the right to assign, like other assignment warranties,
is implied.
In a sale of goods, a good faith purchaser for value __________.
can be a holder of security interest in the goods.
A writing is __________.
Usually not required for effective assignment.
An intended beneficiary must be __________.
identifiable at the time performance is due.
Exceptions to the general rule that all duties may be delegated are:
1) Duties involving personal judgment and skill; 2) Duties in which a special trust has been placed in the delegator; 3) Duties for which delegation will materially change the obligee’s expectancy; and 4) Duties the delegation of which is restricted in the contract.
What best describes the elements required for an effective assignment?
An adequate description of the right being assigned and present words of assignment
An assignment for value is
irrevocable
When an owner of goods entrusts those goods to a merchant who deals in goods of that kind, the merchant has the power to transfer all of the owner’s rights in the goods to __________.
Buyer in the ordinary course of business.
Once an obligor delegates his duties under a contract to a delegate, the obligee __________.
Must look first to the delegate for performance of the duties, but if he fails to perform, then may look to the delegator as a surety for the delegate’s performance
Regarding orders of liability, an obligor who delegates his duties __________.
Remains secondarily liable on the contract, even if the delegate expressly assumes the obligor’s duties under the contract
An assignment is for value even if it is:
taken as payment of a pre-existing debt.
Assignments given as a gift are gratuitous and are subject to
the revocability rules for gratuitous assignments.
In every assignment for value, the assignor implied warrants that: he has a right to make the assignment; the right exists and is not subject to any undisclosed limitations or defenses; and _________.
He will do nothing to defeat or impair the assigned right
The best test for determining whether someone is an intended third-party beneficiary is to ask:
To whom is performance to be given according to the language of the contract?
An assignee’s rights against an obligor are subject to ___________.
The defenses the obligor had against the assignor but not to setoffs arising after notice of assignment
As a general rule, if the promisor fails to perform under a contract, a donee third-party beneficiary whose rights have vested can sue:
The Promisor.
When a party assigns “the contract” to a third party, it results in __________.
an assignment of rights and a delegation of duties to the third party.
When an obligor delegates his duties, the obligor is __________.
secondarily liable as a surety on the contract
If an assignee for value discovers that the assignor had previously assigned the same contract rights to another party for value, the assignee may _________.
sue the assignor for breach of warranty.
When making an assignment, the assignor warrants:
1) He will do nothing in the future to defeat the assigned right; 2) the assigned right is not subject to any valid defenses; 3) That the assignor has the actual right to assign.
A writing is required for an assignment of wages because
it is an assignment of an interest in the real property itself.
When a delegate assumes the duty to perform, the most important consequence is:
The obligee can compel performance or bring suit against the delegate for nonperformance
Under the U.C.C., when a thief attempts to sell the goods he has stolen, the title he passes to the purchaser is __________.
Always Void.
When an obligor delegates his duties under a contract, the delegate cannot be compelled to perform absent
an assumption of duties.
Unless a contrary intention appears elsewhere, if a party to a contract assigns “all my rights under the contract” to a third party, that assignment __________.
Will be construed to include an assumption of all duties as well
If a watch owner leaves her watch for repairs at the store where it was purchased and the store then borrows money from a bank, giving the bank the owner’s watch as pledged collateral, __________.
The watch owner can recover the watch from the bank immediately because the store had no right or power to use the watch as collateral, and title to the watch remained with the watch owner at all times.
An important difference between the rights of a donee beneficiary and a creditor beneficiary is that __________.
a creditor beneficiary can sue the promisee on the underlying obligation, but a donee beneficiary cannot
If a person leaves an item of jewelry with a jeweler for repair, and the jeweler sells the item to an unsuspecting purchaser, __________.
the purchaser has title to the item and the true owner cannot recover it because entrusting goods to a merchant who deals in goods of that kind gives him the power (but not the right) to transfer all of the rights of the entruster to a buyer in the ordinary course of business.
A subsequent delegation of duties by the assignor will NOT
revoke a gratuitous assignment.
Death of the assignor, the assignor taking performance directly from the obligor, and the bankruptcy of the assignor all
WILL revoke a gratuitous assignment.
If an assignor takes payment or performance directly from the obligor, __________.
a gratuitous assignment is revoked but an assignment for value is not.
Under the U.C.C., a good faith purchaser for value can be _________ or ____________.
A buyer without knowledge of any fraud; a person without knowledge of any fraud who takes a security interest in the goods
Situations where an assignment must be in writing include
wage assignments; assignments of an interest in land; assignments of choses in action worth more than $5,000; and assignments intended as security interests
When a delegate assumes the duty to perform, the most important consequence is:
The obligee can compel performance or bring suit against the delegate for nonperformance
As a general rule, if the promisor fails to perform under a contract, a donee third-party beneficiary whose rights have vested can sue:
The promisor
