Third Party Rights

Question 1

List the various types of Third Party Contracts

Answer 1

1. ) Assignments
2. ) Delegations
3. ) Third Party Beneficiaries

Question 2

List contractual delegation exceptions

Answer 2

1. ) Terms prohibit delegation
2. ) Personal Skill/ Special trust
3. ) Material Variation

Question 3

List the various Types of Third Party Beneficiaries

Answer 3

1. ) Donee
2. ) Creditor
3. ) Incidental (not intended)

Question 4

List contractual assignment exceptions

Answer 4

1. ) Terms prohibit assignment
2. ) Statute Prohibits Assignment
3. ) Personal Contracts
4. ) Materially Increases Risks

Question 5

Define “assignment”

Answer 5

The transfer of the benefits under a contract to a third party (contractor assigns payment to a lumber company)

Question 6

Define Third Party Beneficiary contracts

Answer 6

Contract between two parties is set up with the purpose of providing benefits to a third party

Question 7

Describe the rights of a donee beneficiary

Answer 7

Can recover from party required to pay under the contract but not from the [party who makes the arrangements for the payment (Life insurance arrangement - beneficiary can recover from insurance company but not the insured)

Question 8

Define Delegation

Answer 8

The transfer of the detriment (duties) under a contract to a third party (Mr. Ice asks Ice Inc to take over ice supply contract for Lobster Inc)

Question 9

What elements must be in place for a creditor beneficiary to exist

Answer 9

1. ) A debtor-creditor relationship must exist

2. ) The debtor must make a contract with the third party that benefits the creditor

Question 10

When is the assignment binding on the parties to the original contract?

Answer 10

When the original parties receive notice of the assignment

Question 11

When two assignee’s names are on the same contract, which assignment is valid?

Answer 11

1. ) U.S. rule - first in time of assignment

2. ) English Rule - first to give notice of assignment

Question 12

Describe the rights of a creditor beneficiary

Answer 12

Can recover from original debtor who designated the creditor beneficiary or from party required to pay under contract with debtor (health insurance - hospital can recover from insured or insurer)

Question 13

Describe the rights of an incidental beneficiary

Answer 13

Has no right against either party to the original contract

Question 14

Describe the liability of the assignor

Answer 14

Unless released, assignor remains liable

Question 15

Define Incidental Beneficiary

Answer 15

A third party who receives an unintended benefit has no legal rights in a contract between two parties