Third Party Contracts

Question 1

Obligor

Answer 1

person who owes a contractual duty

Question 2

Obligee

Answer 2

person to whom a contractual duty is owed

Question 3

Assignment of Rights

Answer 3

voluntary transfer to a third party of rights arising from the contract

Question 4

The assignment of a right is the manifestation of???

Answer 4

the assignor’s intent to transfer a contractual right to an assignee, extinguishing the assignor’s right to the performance of the obligor

Question 5

Are there any specific words required to make an assignment of a right?

Answer 5

No, language indicating consent to transfer suffice

Question 6

Can an assignment of a right be oral?

Answer 6

Yes

Question 7

Is consideration required for an assignment of a right?

Answer 7

No

Question 8

If an assignee gives consideration does he have legal obligation?

Answer 8

Yes, when the assignee gives consideration he/she is now in a contractual relationship with assignor

Question 9

Partial Assignment

Answer 9

the transfer of a portion of contractual rights

Question 10

What is the most common assignable right?

Answer 10

Payment of money

Question 11

What constitutes a non-assignable right? (4)

Answer 11

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

Question 12

What rights does the assignee have?

Answer 12

“The assignee stands in the shoes of the assignor”

• has all rights assignor has
• can be sued for same liabilities as assignor

Question 13

Is it required that an obligor be notified of an assignment of a right in the contract?

Answer 13

Not required, however is highly encouraged.

Question 14

If an obligor is not notified of an assignment and pays assignor before assignee, what happens?

Answer 14

Assignee loses rights against obligor

Question 15

Implied Warranties

Answer 15

obligations imposed by law on transferor of property or rights

Question 16

What are the Assignor’s promises to Assignee under Implied Warranty?

Answer 16

• 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

Question 17

Express Warranty

Answer 17

explicitly made contractual promise regarding the property or rights transferred

Question 18

Successive Assignment ruling under contract law

Answer 18

The first assignee in point of time prevails over later assignee

Question 19

Successive Assignment ruling under Restatement

Answer 19

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

Question 20

Delegation of Duties

Answer 20

transfer of a contractual obligation to a third party

Question 21

When is the delegation duties not permitable?

Answer 21

when

1) nature of duty is personal
2) performance expressly prohibited
3) illegal

Question 22

T/F: A delegation of a duty binds the delegatee to perform

Answer 22

True

Question 23

Novation

Answer 23

All three parties consent to substitute delegatee for delegator. Delegator no longer has any rights or responsibilities!

Question 24

Third Party Beneficiary Contracts

Answer 24

Promisor agrees to render performance to a third party

Question 25

Intended Beneficiary

Answer 25

intended by two parties of a contract to receive a benefit from the performance of their agreement

Question 26

Incidental Beneficiary

Answer 26

third party not intended to receive benefit under contract - has no enforceable rights

Question 27

Donee Beneficiary

Answer 27

promisee’s purpose in obtaining contract is to make a gift of promised performance to beneficiary

Question 28

Who could a donee potentially sue?

Answer 28

Donee may only enforce a contract against the promisor. The promisee owes beneficiary nothing as their relationship is gratuitous

Question 29

Creditor Beneficiary

Answer 29

promisee intends the performance of promise to satisfy a legal duty owed to beneficiary

Question 30

Who could a creditor potentially sue?

Answer 30

A creditor can sue either of the two other parties involved

Question 31

Quasi Contract

Answer 31

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