Chapter16 - Third Party Rights A party to a contract can...

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Third Party Rights A party to a contract can assign the rights arising from it to another or delegate the duties of the contract by having another perform them. A third party also acquires rights to enforce a contract when the contract parties intend the contract to benefit the third party (who is an intended beneficiary). When a contract only incidentally benefits a third party, he or she is an incidental beneficiary and cannot enforce it. Assignments and Delegations In a bilateral contract, the two parties have corresponding rights and duties. One party has a right to require the other to perform some task, and the other has a duty to perform it. The transfer of contractual rights to a third party is known as an assignment. The transfer of contractual duties to a third party is known as a delegation. An assignment or a delegation occurs after the original contract was made. Assignments When rights under a contract are assigned unconditionally, the rights of the assignor (the party making the assignment) are extinguished. The third party (the assignee , or party receiving the assignment) has a right to demand performance from the other original party to the contract.
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For example, suppose that Giles is obligated by contract to pay Rogers $1,000. In this situation, Giles is the obligor , because he owes an obligation, or duty, to Rogers. Rogers is the obligee , the one to whom the obligation, or duty, is owed. Now suppose that Rogers assigns his right to receive the $1,000 to Hall. Rogers is the assignor, and Hall is the
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Chapter16 - Third Party Rights A party to a contract can...

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