Third Party Rights

Question 1

Intended Third Party Beneficiaries (TPBs)

Answer 1

• have rights under a contract once their rights VEST

- rights vest when there is ASSENT, RELIANCE, or when a 3rd party brings a lawsuit

Question 2

Incidental TPB

Answer 2

do not have rights under a contract

Question 3

Factors to determine if a TPB is intended:

Answer 3

1. is the TPB expressly designated in the contract?
2. is performance directly to the TPB?
3. does the TPB have any rights?
4. what is the relationship between the TPB and the promisee?

Question 4

Delegation

Answer 4

• General rule = one may delegate DUTIES under a contract unless the contract prohibits it or if the contract involves special skill, judgment, or trust
• neither consent, consideration, or a writing needed to delegate a duty
• delegator remains liable on the contract after delegation
• delgatee is liable if he receives consideration from the delegator

Question 5

Assignment

Answer 5

• General rule = rights can be assigned unless the assignment substantially changes the obligor’s duties or the contract prohibits it
• an assignment may not be revoked if there was consideration given OR if it is payment for a preexisting debt
• assignment is revoked if the assignor takes performance directly or makes a subsequent assignment to a different party