Third Party Issues Flashcards
If two parties contract with some intent of benefiting a third party, that third party is a
third-party beneficiary (TPB)
Who is a creditor TPB?
benefit is conferred based on a debt owed by the promisee to the K.
Who is a TPB donee?
benefit is conferred gratuitiously
One becomes an intended TPB to a K if they are:
- expressly designated in the K;
- directly benefit from some performance under the K; or
- stand in such a relationship to the promisee under the K that an intent to benefit the third party can be inferred
Who is an incidental beneficiary?
someone who does not meet the req of an intended beneficiary and they have no rights.
In what three ways may a TPB’s rights vest?
- the TPB assents to the promise in a manner equirested by both parties to the K
- the TPB brings suit to enforce the promise
- the TPB materially changes position in justifiable reliance on the promise
How can a TPB enforce a K?
- TPB can sue promisor
- promisee can sue promisor at law and in equity for specific performance
- TPB can only sue promisee it TPB is a creditor beneficiary
What is an assignment?
a transfer of rights to a third party after a K is formed. consideration is not required.
What are the common law limitations on assignments?
CL bars assignments tthat substantially change the duties of the obligor
Is assignment of payment a substantial change?
No.
Is assignment of rights to performance a substantial change?
Yes.
What are contractual limitations on the rights of assignment>
- K provisions prohibiting assignments;
2. K provisions invalidating agreements
Are assignments for consideration revocable?
No.
Are gratuitous assignments revocable?
Yes, unless
- obligor has already performed;
- a tangible claim or writing is delivered oto assignee, or
- detrimental reliance by assignee
Gratuitous assignments may be revoked or terminated by:
- death or bankruptcy or assignor;
- notice of revocation by assignor
- taking of performance by assignor, or
- later assignment to another.
