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Contracts > Third Party Problems > Flashcards

Third Party Problems Flashcards

1
Q

Who is a third party beneficiary?

A

Someone who benefits from the contract of two other parties, with the common intent to benefit the third party.

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2
Q

Who is the promisor in a third party beneficiary case?

A

The person who is making the promise that benefits the third party.

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3
Q

Who is the promisee in a third party beneficiary case?

A

The person who obtains the promise that benefits the third party.

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4
Q

Do incidental third party beneficiaries have contract law rights?

A

No, only intended beneficiaries.

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5
Q

Can a party to a third party beneficiary contract cancel the contract?

A

If the third party knows or has relied upon or has assented as requested, her rights have vested and the contract may not be modified or canceled unless the contract otherwise provides.

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6
Q

Can a beneficiary recover from the promisor?

A

Yes.

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7
Q

Can the promisee recover from the promisor?

A

Yes

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8
Q

Can the beneficiary recover from a promisee?

A

No, unless creditor beneficiary but only on pre-exiting debt.

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9
Q

Can T recover from B if B owed T $100 before B ordered the grits to satisfy that
debt and the grits were never delivered?

A

yes preexisting debt from creditor promisee

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10
Q

What defenses are available against a third party beneficiary?

A

THe promisor can assert any defense that he would have had if sued by the promisee.

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11
Q

What is an assignment?

A

A transfer of rights under contracts.

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12
Q

What are the steps of an assignment?

A

1) contract between only two parties and 2) one of the parties later transfers rights under that contract to a third party.

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13
Q

Can offers be assigned?

A

no

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14
Q

Who is the assignor?

A

Party to the contract who later transfers rights under the contract

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15
Q

Who is the assignee?

A

Not a party to the contract. Able to enforce the contract because of the assignment.

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16
Q

Who is the obligor?

A

other party to the contract.

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17
Q

What are the limitations of an assignment?

A

Contractual provisions.

18
Q

What is the effect of a prohibition on assignment in a contract?

A

It takes away the right to assign but not the power to assign. Which means that the assignor is liable for breach of contract, but an assignee who does not know of the prohibition can still enforce the assignment.

19
Q

What words function as a prohibition on assignment?

A

Rights hereunder are not assignable

20
Q

Batman-Gotham contract provides “rights hereunder are not assignable.”
Notwithstanding this contract provision, Batman assigns the right to the $300,000
payment to Robin who does not know about the contract provision. Can Robin
collect from Gotham?

A

Yes, because even though there was a provision sayng that rights were not assignable, Robin did not know about it and therefore has all the rights of an assignee. Gotham can sue Batman though.

21
Q

What is the effect of an invalidation on an assignment?

A

Language of an invalidation takes away both the right to assign and the power to assign, so that there is a breach by the assignor and the assignee has no rights.

22
Q

What are the words that function as an invalidation of an assignment?

A

all assignments of rights under this contract are void.

23
Q

If there is any doubt as to whether an invalidation or a prohibition go with prohibition

A

Epstein Hint

24
Q

What if there are no words in the contract or fact pattern regarding assignability?

A

Common law bars an assignment that substantially changes the duties of the obligor.

25
Q

IS the assignment of the right to payment a substantial change?

A

No.

26
Q

Gotham assigns its rights to security services under the contract with Batman to
Metropolis, i.e. Batman is to defend Metropolis, not Gotham. Does this
substantially change the duty of the obligor so that the assignment is not
enforceable?

A

Yes, b/c under the original contract Batman was to protect Gotham and not Metropolis. Batman is the obligor, he is obligated to protect Gotham. Thus the assignment is invalid.

27
Q

What are the requirements for an assignment?

A

Generally considedration is not required, but gratuitous assignments (and only gratuitous assignments) can be revoked.

28
Q

What kind of assignments can be revoked?

A

Only gratuitous ones.

29
Q

Who can an assignee recover from?

A

The obligor

30
Q

Can an assignor FOR consideration recover from obligor?

A

No.

31
Q

What defenses does an obligor have against an assignee?

A

All the defenses available that he would have against assignor.

32
Q

Is payment by obligor to assignor effective?

A

yes until obligor knows of the assignment.

33
Q

Are modification agreements between obligor and assignor effective?

A

Up until the point that the obligor knows of the assignee.

34
Q

What does an assignor in an assignment for consideration warrant?

A

The right assigned actually exists, the right assigned is not subject to any then existing defenses by the obligor, the assignor will do nothing after the assignment to impair the value of the assignment. Assignor does not warrant what the obligor will do after the assignment.

35
Q

Which assignment is effective if there are multiple assignments?

A

Last in time rule. Last assignee generally wins.

36
Q

Which assignment for consideration is effective if there are multiple assignments?

A

First in time rule. First assignee wins.

37
Q

What is the exception to the first in time rule of assignments for consideration?

A

A subsequent assignee takes priority over an earlier assignee for value only if he both (i) does not know of the earlier assignment and (ii) is the first to obtain (1) payment (2) a judgment, or (3) a novation, or (4) indicia of ownership.

38
Q

What is a delegation?

A

Party to a contract transfers work under that contract to a third party.

39
Q

What is the relation between an assignment and delegation?

A

Often times they will occur in the same contract. There will be an assignment of rights and benefits coupled with a delegation of duties and burdens.

40
Q

What duties are delegable?

A

Contractual duties.

41
Q

What is the limitation to delegation of duties?

A

Delegations are permitted unless either (1) contract prohibits delegations OR PROHIBITS assignments or (2) personal services contract that requires very special skills

42
Q

What happens if after delegation the third party delegatee does not perform?

A

Delegating party always remains liable. Delegatee is only liable if she receives consideration from delegating party.

Contracts (9 decks)

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