third-party beneficiary contracts + assignment of rights & delegation of duties

Question 1

third-party beneficiary contracts

Answer 1

when two parties contract with the understanding and intent that performance by one of the parties is to benefit a third person

Question 2

intended vs incidental beneficiaries

Answer 2

third party can recover if she is an intended
beneficiary

Question 3

intended beneficiary

Answer 3

one to whom the promisee wishes to satisfy an obligation or otherwise benefit by the promised performance; has the right to bring an action on the K

Question 4

incidental beneficiary

Answer 4

one who benefits from a K even though there is no contractual intent to benefit that person; no right to enforce K

Question 5

vesting of intended beneficiary’s rights

Answer 5

rights of intended beneficiary vest when beneficiary:
1. Detrimentally relies on rights created;
2. Manifests assent to K at one of the party’s request; OR
3. Files lawsuit to enforce K.

Question 6

defenses to third-party beneficiary contracts

Answer 6

promisor can raise any defense against third party that he had against original promisee

Question 7

assignment of rights - prohibited

Answer 7

an assignment of rights is not allowed when it materially increases duty or risk of obligor or materially reduces obligor’s chance of obtaining performance

Question 8

assignment of rights - intent

Answer 8

need present intent to transfer the right immediately

Question 9

assignment of rights - consideration

Answer 9

If assignment is for consideration, it is irrevocable

Question 10

assignment of rights - assignee rights and defenses

Answer 10

Assignee takes all of the rights of assignor as the K stands at time of the assignment, but
she takes subject to any defenses that could be raised against the assignor

Question 11

assignment of rights - prohibition on assignment

Answer 11

A prohibition on assignment does not affect the assignment of rights, but bars delegation
of duties (unless circumstances indicate otherwise)

Question 12

delegation of duties - general rule

Answer 12

Generally allowed, except when other party to K has substantial interest in a specific
individual’s performance (for example, personal services K involving special skill)

Question 13

delegation of duties - liability

Answer 13

When obligations are delegated, delegator is not released from liability, so he is still liable if
delegate doesn’t perform (unless there is a novation)

Question 14

delegation of duties - acceptance as promise to perform

Answer 14

Delegate’s acceptance of a delegation constitutes a promise to perform the delegated
duties; promise is enforceable if there is consideration or a consideration substitute

Question 15

delegation of duties - contracts for the sale of goods

Answer 15

Delegation in contracts for the sale of goods may be treated by the other party as creating
reasonable grounds for insecurity; the other party may demand assurances from delegate;
conforming promises by permitted delegates must be accepted

Question 16

delegation of duties - prohibition on assignment

Answer 16

A prohibition on assignment does not affect the assignment of rights, but bars delegation
of duties (unless circumstances indicate otherwise)

Question 17

assignment of contract

Answer 17

assignments not limited to contractual rights (e.g., “this contract is assigned to”) are generally treated as both an assignment of rights and a delegation of duties