Third Party Contracts Flashcards
Obligor
person who owes a contractual duty
Obligee
person to whom a contractual duty is owed
Assignment of Rights
voluntary transfer to a third party of rights arising from the contract
The assignment of a right is the manifestation of???
the assignor’s intent to transfer a contractual right to an assignee, extinguishing the assignor’s right to the performance of the obligor
Are there any specific words required to make an assignment of a right?
No, language indicating consent to transfer suffice
Can an assignment of a right be oral?
Yes
Is consideration required for an assignment of a right?
No
If an assignee gives consideration does he have legal obligation?
Yes, when the assignee gives consideration he/she is now in a contractual relationship with assignor
Partial Assignment
the transfer of a portion of contractual rights
What is the most common assignable right?
Payment of money
What constitutes a non-assignable right? (4)
1) material increase of duty, risk, or burden on obligor
2) transfer of highly personal contract rights
3) expressly prohibited by the contract
4) illegality
What rights does the assignee have?
“The assignee stands in the shoes of the assignor”
- has all rights assignor has
- can be sued for same liabilities as assignor
Is it required that an obligor be notified of an assignment of a right in the contract?
Not required, however is highly encouraged.
If an obligor is not notified of an assignment and pays assignor before assignee, what happens?
Assignee loses rights against obligor
Implied Warranties
obligations imposed by law on transferor of property or rights
What are the Assignor’s promises to Assignee under Implied Warranty?
- assignor will do nothing to impair assignment
- assigned right actually exists
- any writing that evidences right is exhibited
- has no knowledge of any fact that would impair value of assignment
Express Warranty
explicitly made contractual promise regarding the property or rights transferred
Successive Assignment ruling under contract law
The first assignee in point of time prevails over later assignee
Successive Assignment ruling under Restatement
prior assignee prevails UNLESS -prior assignment in revokable OR subsequent assignee in good faith w/o knowledge of prior assignment gives value or obtains 1) payment of obligor's duty 2) judgement against obligor 3) a new contract with obligor 4) written document accepted as symbol of right
Delegation of Duties
transfer of a contractual obligation to a third party
When is the delegation duties not permitable?
when
1) nature of duty is personal
2) performance expressly prohibited
3) illegal
T/F: A delegation of a duty binds the delegatee to perform
True
Novation
All three parties consent to substitute delegatee for delegator. Delegator no longer has any rights or responsibilities!
Third Party Beneficiary Contracts
Promisor agrees to render performance to a third party
Intended Beneficiary
intended by two parties of a contract to receive a benefit from the performance of their agreement
Incidental Beneficiary
third party not intended to receive benefit under contract - has no enforceable rights
Donee Beneficiary
promisee’s purpose in obtaining contract is to make a gift of promised performance to beneficiary
Who could a donee potentially sue?
Donee may only enforce a contract against the promisor. The promisee owes beneficiary nothing as their relationship is gratuitous
Creditor Beneficiary
promisee intends the performance of promise to satisfy a legal duty owed to beneficiary
Who could a creditor potentially sue?
A creditor can sue either of the two other parties involved
Quasi Contract
1) No contract exists
2) Transfer of benefit
3) No intention to make a gift
4) Other party accepts the benefit knowing about expected payment
