5. Third-Party Problems Flashcards Preview

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Flashcards in 5. Third-Party Problems Deck (44)
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1

What will a third-party beneficiary question involve?

Two parties contracting with a common intent to benefit a third-party

2

Who is a third-party beneficiary?

Not a party to the contract, but can enforce a contract made for her benefit

3

In a third-party beneficiary question, who is the promisor?

The party to the contract who will do the thing to benefit the third-party

4

Who is the promisee?

The other party

5

What must a third-party beneficiary be to be able to enforce the contract?

Intended

6

What is the difference between a creditor beneficiary and a donee beneficiary?

A creditor beneficiary is someone to whom the promisee owed a debt before the contract

7

Until when can a TPB contract be canceled/modified?

Until the TPB's rights have vested

8

What causes the TPB's rights to vest?

1. Know of and rely upon the contract OR

2. They assent when told about it 

9

On the MBE, how will we know if a third-party beneficiary was intended?

They will be named in the question

10

What two things can allow a contract to be canceled or modified even after TPB's rights vest?

1. Contract expressly provides that it can

2. TPB consents

11

In a TPB contract, from whom can the beneficiary recover?

1. Promisor always

2. Promisee only if TPB is a creditor

12

In a TPB contract, can a promisee recover from a promisor?

Only if the beneficiary has not yet recovered from the promisor

13

What defences can a promisor assert against a TPB?

Any defences it would have had if it were sued by the promisee

14

What is assignment?

Transfer of rights under a contract

15

Who is the assignor?

The parties who transfers his rights under a contract

16

Who is the assignee?

The third-party to whom rights are transferred

17

What is the name of the other party to a contract under which rights are assigned?

Obligor

18

What are the two types of clauses dealing with assignment?

1. Prohibition clause

2. Invalidation clause

19

What does a prohibition clause do?

Takes away the right, but not the power to assign

20

Can an assignee enforce his assigned rights even though the contract has a prohibition clause?

Yes, unless he knows of the clause

21

What does an invalidation clause do?

Takes away both the right and power to assign

22

Can an assignee enforce his assigned rights even though the contract has a invalidation clause?

No

23

Where the contract is silent on assignment, what does the common law prohibit?

Assignments which substantially change the obligor's duty or obligation

24

What is the consequence of an assignment which substantially changes the obligor's duty?

It is not enforceable

25

What sort of assignment is never a substantial change for the obligor?

Assigning the right to be paid to someone else

26

What sort of assignment is usually a substantial change?

Assignment which changes performance (other than who to pay of course)

27

Is consideration required for an assignment to be valid?

No

28

Even though consideration is not required for an assignment to be valid, what is the effect of an assignment without consideration?

It can be revoked

29

From whom can the assignee recover?

Obligor

30

Can the assignor for consideration recover from the obligor? How come?

No

Because an assignment is a transfer of rights, so the assignor no longer has contract rights

31

Why does consideration affect an assignor's ability to recover from obligor?

Because an assignment for consideration is irrevocable. If the assignment is gratuitous, assignor can just revoke and enforce the contract

32

What defences can an obligor assert against an assignee?

The same defences it would have against the assignor

33

When does an obligor's liability to an assignee begin?

When he learns of the assignment

34

What are the three implied warranties made by an assignor for consideration?

1. The right transferred actually exists

2. The right is not subject to any existing defences by the obligor

3. After assignment, assignor will do nothing to impair the value of the assignment

 

35

Does the assignor warrant what the obligor will do?

No

36

Where there are multiple gratuitous assignments, which assignee has the rights?

The last assignee

37

Where there are multiple assignments for consideration, which assignee has the rights?

Generally, the first assignee for consideration

38

What two criteria must be satisifed for a subsequent assignee for consideration to prevail?

1. Must be unaware of earlier assignments

2. Must be the first to obtain payment, judgment, novation, or an indicia of ownership regarding the contract

39

What is a delegation?

Transfer of the duties under a contract

40

Does delegating a duty automatically assign the right to be paid?

No

41

What duties are delegable?

Most contractual duties

42

What are the two exceptions to the rule that most contractual duties are delegable?

1. Where assignments or delegations are prohibited

2. Where the contract explicitly or implicitly calls for very special skills

43

Who is liable when duties are delegated?

1. Delegator always

2. Delegatee only if she receives consideration from delegatee

44

If the delegatee receives consideration and is therefore liable, does this relieve the delegator of his liability?

No, delegator is always liable