What will a third-party beneficiary question involve?
Two parties contracting with a common intent to benefit a third-party
Who is a third-party beneficiary?
Not a party to the contract, but can enforce a contract made for her benefit
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
Who is the promisee?
The other party
What must a third-party beneficiary be to be able to enforce the contract?
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
Until when can a TPB contract be canceled/modified?
Until the TPB's rights have vested
What causes the TPB's rights to vest?
1. Know of and rely upon the contract OR
2. They assent when told about it
On the MBE, how will we know if a third-party beneficiary was intended?
They will be named in the question
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
In a TPB contract, from whom can the beneficiary recover?
1. Promisor always
2. Promisee only if TPB is a creditor
In a TPB contract, can a promisee recover from a promisor?
Only if the beneficiary has not yet recovered from the promisor
What defences can a promisor assert against a TPB?
Any defences it would have had if it were sued by the promisee
What is assignment?
Transfer of rights under a contract
Who is the assignor?
The parties who transfers his rights under a contract
Who is the assignee?
The third-party to whom rights are transferred
What is the name of the other party to a contract under which rights are assigned?
What are the two types of clauses dealing with assignment?
1. Prohibition clause
2. Invalidation clause
What does a prohibition clause do?
Takes away the right, but not the power to assign
Can an assignee enforce his assigned rights even though the contract has a prohibition clause?
Yes, unless he knows of the clause
What does an invalidation clause do?
Takes away both the right and power to assign
Can an assignee enforce his assigned rights even though the contract has a invalidation clause?
Where the contract is silent on assignment, what does the common law prohibit?
Assignments which substantially change the obligor's duty or obligation
What is the consequence of an assignment which substantially changes the obligor's duty?
It is not enforceable
What sort of assignment is never a substantial change for the obligor?
Assigning the right to be paid to someone else
What sort of assignment is usually a substantial change?
Assignment which changes performance (other than who to pay of course)
Is consideration required for an assignment to be valid?
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
From whom can the assignee recover?
Can the assignor for consideration recover from the obligor? How come?
Because an assignment is a transfer of rights, so the assignor no longer has contract rights
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
What defences can an obligor assert against an assignee?
The same defences it would have against the assignor
When does an obligor's liability to an assignee begin?
When he learns of the assignment
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
Does the assignor warrant what the obligor will do?
Where there are multiple gratuitous assignments, which assignee has the rights?
The last assignee
Where there are multiple assignments for consideration, which assignee has the rights?
Generally, the first assignee for consideration
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
What is a delegation?
Transfer of the duties under a contract
Does delegating a duty automatically assign the right to be paid?
What duties are delegable?
Most contractual duties
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
Who is liable when duties are delegated?
1. Delegator always
2. Delegatee only if she receives consideration from delegatee
If the delegatee receives consideration and is therefore liable, does this relieve the delegator of his liability?
No, delegator is always liable