Unformatted text preview: Business Law and the Regulation of Business Regulation
Chapter 16: Third Parties to Contracts Chapter By Richard A. Mann & Barry S. Roberts Topics Covered in this Chapter Topics
A. Assignment of Rights B. Delegation of Duties C. Third-Party Beneficiary Contracts Assignment of Rights
s s s s s Definition of Assignment – voluntary transfer to a third party of the rights arising from a contract so that the assignor's right to performance is extinguished. performance Assignor – party making an assignment. party Assignee – party to whom contract rights are assigned. are Obligor – party owing a duty to the assignor under the original contract. under Obligee – party to whom a duty of performance is owed under a contract. performance Assignment of Rights
s s s s Requirements of an Assignment – include intent but not consideration. but Revocability of Assignment – if assignee gives consideration, assignor may not revoke the assignment without the assignee's consent. assignment Partial Assignment – transfer of a portion of contractual rights to one or more assignees. contractual Successive Assignments –majority rule is that the majority first assignee in point of time prevails over later assignees; minority rule is that the first assignee to notify the obligor prevails. notify Assignability Assignability
s Most contract rights are assignable, Most except: except:
– assignments that materially increase assignments the duty, risk, or burden upon the obligor obligor – assignments of personal rights – assignments expressly forbidden by the assignments contract contract – assignments prohibited by law Rights and Defenses Rights
Rights of Assignee – the assignee Rights stands in the shoes of the assignor. stands s Defenses of Obligor – may be Defenses asserted against the assignee. asserted s Notice – is not required but is Notice advisable. advisable.
s Warranty Warranty
Implied Warranty – obligation imposed by law upon the assignor of a contract right. contract s Express Warranty – explicitly made contractual promise regarding contract rights transferred. rights
s Delegation of Duties
Definition of Delegation – transfer to a third party of a contractual obligation. third s Delegator – party delegating his duty to a third party. third s Delegatee – third party to whom the delegator's duty is delegated. delegator's s Obligee – party to whom a duty of performance is owed by the delegator and delagatee. and
s Delegability Delegability
s Most contract duties may be delegated, Most except: except:
– duties that are personal – duties that are expressly nondelegable – duties whose delegation is prohibited duties by statute or public policy by Duties of Parties Duties
Delegation – delegator is still bound to perform original obligation. perform s Novation – contract, to which the obligee is a party, substituting a new promisor for an existing promisor, who is consequently no longer liable on the original contract and is not liable as a delegator. delegator.
s Third-Party Beneficiary Contracts Third-Party
s s s s Definition – a contract in which one party promises to render a performance to a third person (the beneficiary). person Intended Beneficiaries – third parties intended by the two contracting parties to receive a benefit from their contract. receive Donee Beneficiary – a third party intended to receive a benefit from the contract as a gift. receive Creditor Beneficiary – a third person intended to receive a benefit from the agreement to satisfy a legal duty owed to her. agreement Intended Beneficiaries Intended
Rights of Intended Beneficiaries – an Rights intended donee beneficiary may enforce the contract against the promisor; an intended creditor beneficiary may enforce the contract against either or both the promisor and the promisee. the s Vesting of Rights – if the beneficiary's Vesting rights vest, the promisor and promisee may not thereafter vary or discharge these vested rights. these
s Intended Beneficiaries Intended
s Defenses Against Beneficiary – in an Defenses action by the intended beneficiary of a third-party contract to enforce the promise, the promisor may assert any defense that would be available to her if the action had been brought by the promisee. promisee. Incidental Beneficiaries Incidental
s Incidental Beneficiary – third party Incidental whom the two parties to the contract have no intention of benefiting by their contract and who acquires no rights under the contract. under ...
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