THIRD PARTY RIGHTS

Question 1

Third Party Beneficiaries

Answer 1

Incidental TPBs don’t have K rights, only intended TPB’s do.

No cancellation or modification after TPB’s rights have vested by either relying, assenting or suing for enforcement.

Question 2

Assignment of Rights

Answer 2

One party transfers rights under K to assignee.
Language important: If K states “Rights under this K are not assignable” → Assignment is still valid.
Assignor is liable for breach but assignee who doesn’t
know of prohibition can enforce.
BUT, if K states “All assignments under this K are void” → Assignments are invalidated.

Question 3

Gratuitous Assignment of Rights v.

Assignment for Consideration

Answer 3

Gratuitous assignment: can be revoked; last gratuitous assignment wins.
Assign for consideration: no recovery from obligor.
(i) Assignor implies warranty that right exists; (ii) Right not subject to any defenses;
(iii) Assignor won’t do anything to impair value
of assignment.
First assignment for consideration wins.

Question 4

Delegation

Answer 4

Allowed unless K prohibits delegation, K calls for very special skills, or K has very special reputation.
If 3rd party doesn’t perform, delegating party always
remains liable.
Delegatee liable only if receives consideration from delegating party, in which delegatee is liable to delegating party and obligee.