THIRD PARTIES TO CONTRACTS_1

THIRD PARTIES TO CONTRACTS_1 - THIRD PARTIES TO CONTRACTS...

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THIRD PARTIES TO CONTRACTS
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Introduction Rights to enforce a contractual obligation by person not a party to contract Historically, privity required i.e., only party who had given consideration could enforce Two types of situations - Assignments, Third Party Beneficiaries
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Introduction (cont.) Distinguish by when rights acquired Third party beneficiary - rights acquired at time contract made as part of contract Assignment - Transfer (assignment) of rights after contract made In both situations, right of third party are derivative Third party has no greater rights than party to contract If party against whom enforcement is sought has defense to contract, e.g., breach, fraud, can use that defense against third party
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ASSIGNMENTS obligor obligee goods S B $$$$$ obligee obligor assignor A (assignee) Assignment - voluntary transfer of rights Valid assignment terminates rights of assignor and transfers those rights (and only those rights) to assignee
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“Assignability” Generally all contract rights may be assigned unless 1. Materially changes obligor’s duties - e.g. insurance 2. Highly personal rights - e.g. job, loan
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3. Prohibited by contract – Note: anti-assignment provision in contract generally considered to only prohibit delegation of duty (UCC § 2-210(2)) UCC §9-318 – Can’t prohibit assignment of right to payment 4. Prohibited by statute - e.g. GOL §13-101 - claim to personal
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THIRD PARTIES TO CONTRACTS_1 - THIRD PARTIES TO CONTRACTS...

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