Third Party Problems

Question 1

Entruster who gives item to a merchant who regularly sells these goods has no rights against a bona dude purchaser (BFP). T/F

Answer 1

True

Question 2

Only the ____ third party beneficiary may recover under the contract.

Answer 2

Intended — NOT incidental

Question 3

Contract can be rescinded or modified before third party beneficiary’s interest is ______.

Answer 3

Vested. E.g. TPB learns of contract and relies on it

Question 4

What’s an assignment? How is it different from TPB situations?

Answer 4

X (obligor) contracts with Y (assignor), then Y assigns her right to X’s performance to Z (assignee). TWO STEPS

Diff because Y actually gives her rights to Z, unlike TPB. And in TPB, it’s just one contract for the benefit for another. ONE STEP

Question 5

Assignment may be promised. T/F

Consideration is not needed for assignments. T/F

Answer 5

False. It must happen right away.

True.

Question 6

If assignment is not permitted but assignee didn’t know, she [still can/cannot] collect.

If assignment is invalidated, the assignee can/cannot collect.

Answer 6

Still can

Cannot

Question 7

Assignments [can/cannot] substantially change the obligations under a contract.

Answer 7

Cannot.

If the change is a performance right (e.g. it changes who will perform a service when it’s a unique thing), it’s a substantial change

Question 8

Gift assignments: which assignee wins?

Answer 8

The last in time, because each new assignment revokes the previous

Question 9

The first assignee for consideration wins over all subsequent assignees AND gift assignees. T/F

Answer 9

True

Question 10

What happens if a later consideration assignee doesn’t know about the previous consideration assignment and is the first to get a payment or judgment from obligor?

Answer 10

It’s an exception to the “first in time” rule for consideration assignees and the later consideration assignee wins

Question 11

Delegation is a transfer of ____, not rights.

Answer 11

Duties

Question 12

The obligee must agree for duties to transfer to another party. T/F

Answer 12

Generally false.

Exceptions are when the duties involve personal judgment and skill, would change obligee’s expectancy, there’s a special trust, or contractual restriction on delegation

Question 13

“No assignments” in a contract still allows for delegations. T/F

Answer 13

False. “No assignments” equals “no delegations”

Question 14

The delegating party is no longer liable to the obligee. T/F

Answer 14

False. Delegating party is ALWAYS liable to obligee

Question 15

Delegates who don’t receive consideration are ____, whereas those that do receive consideration are ____.

Answer 15

Not liable; liable