Third Party Rights and Obligations Flashcards

1
Q

What is a Third Party Beneficiary (TPB)?

A

Where the parties, at the time of contracting, contemplate performance to be rendered to a third, non-contracting party.

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2
Q

What is the only type of Third Party Beneficiary to have rights?

A

An Intended TPB

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3
Q

What are the three (usual) elements that create an Intended TPB?

A

1) the TPB is named in the contract 2) performance runs directly to the TPB from the promisor, and 3) there is a special relationship between the TPB and the promisee

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4
Q

If a TPB is not Intended, what are they?

A

Incidental

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5
Q

Do Incidental TPB’s have any rights?

A

No

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6
Q

What are the two sub-types of Intended TPB’s?

A

Creditor TPB and Donee TPB

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7
Q

What is a Creditor TPB?

A

The person has become a TPB to satisfy an underlying obligation by the promisee

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8
Q

What is a Donee TPB?

A

The person has become a TPB because the promisee is giving them a gift

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9
Q

Before a TPB’s rights have “vested”, can the promisor and promisee modify their contract even up to the point of eliminating the TPB?

A

Yes

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10
Q

What three conditions create “vested rights” in the TPB?

A

1) The TPB is asked to assent to be a TPB in a manner prescribed by the parties 2) the TPB detrimentally relies on the promise 3) the TPB brings a lawsuit to enforce the promise

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11
Q

What two conditions do not result in the creation of “vested rights” in the TPB?

A

1) when the contract is formed, nor 2) when the TPB learns of the contract

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12
Q

Under what two conditions can a TPB sue?

A

1) TPB can sue the promisor for specific performance to the TPB 2) TPB can sue the promisee on the underlying obligation if the TPB is a creditor TPB.

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13
Q

Under what one condition can the promisee sue the promisor in a TPB contract?

A

For specific performance to the TPB

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14
Q

What defenses are available to the promisor against the TPB if sued?

A

Any defense the promisor could use against the promisee if sued

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15
Q

What is an Assignment of Rights?

A

Where the parties, at the time of contracting, do not contemplate performance to a third, non-contracting party, but subsequently, a party transfers rights under the contract to a third party.

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16
Q

What two conditions would make an assignment invalid?

A

1) If the assignment materially alters the obligor’s duty or risk 2) the assignment is prohibited by the law.

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17
Q

What would constitute a material alteration to the obligor’s duty or risk under Assignment?

A

Too personal (or possibly) under a Requirement and Output contract

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18
Q

Can a Requirement and Output contract be Assigned?

A

Not under Common Law. Under the UCC, yes (if done so in good faith).

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19
Q

In order for rights to be properly Assigned, what is required with regard to intent?

A

Intent by the assignor to assign the rights

20
Q

Within an Assignment, is any particular language required?

A

No

21
Q

Must an Assignment be in writing?

A

Sometimes

22
Q

What four Assignments require a writing?

A

1) Wage assignments 2) Interests in land 3) Interest in choses in action for more than $5,000 4) Security interests

23
Q

When a right is assignable and is properly assigned, what two things occur with regard to the assignee?

A

1) the assignee becomes a real party of interest 2) once notified, the obligor must deal directly with the assignee

24
Q

The Assignee may sue whom and under what?

A

May sue the Obligor under the contract and/or the Assignor under breach of warranty

25
Q

When the Assignee sues the Assignor under breach of warranty, what two conditions of warranty might the Assignee sue for?

A

1) Warranty not to interfere with assignment 2) Warranty that assigned right is not subject to defenses

26
Q

What defenses are available to the Obligor against the Assignee if sued under the contract?

A

Any defense the Obligor could have used against the Assignor

27
Q

Are gratutious assignments generaly revocable?

A

Yes, unless they are in writing

28
Q

What are the four conditions under which a gratuitous assignment is irrevocable?

A

1) the assignee has detrimentally relied upon the assignment 2) the assignment is in writing 3) the assignee receives a token chose 4) the obligor has completely performed to the assignee

29
Q

Is an Assignment for consideration revocable?

A

No

30
Q

When there are multiple assignments of the same right, what happens to revocable assignments?

A

They are revoked by subsequent Assignments

31
Q

When there are multiple assignments of the same right, what happens to irrevocable assignments?

A

They compete “first-in-time, first-in-right”

32
Q

When there are multiple Assignments of the same right, under what condition would an irrevocable Assignment not compete “first-in-time, first-in-right”?

A

Subsequent assignee takes without notice of prior assignment (and) gets judgement, payment, token chose, or obtains a novation or estoppel.

33
Q

Within Assignment of the contract, what verbiage may represent an Assignment of the contract? What does that verbiage represent?

A

Assignment of “the contract” or of “all my rights under the contract”. Represents an Assignment of rights and delegation of duties.

34
Q

With regard to an Assignment, a prohibition of the Assignment of “the contract” is to be construed as meaning what?

A

It is barring only the delegation of duties

35
Q

With regard to Non-Assignment clauses, what happens if the clause does not contain the word “VOID”?

A

Then the assignor has the “power” but not the “right” to assign. In this case, the assignment is effective but the assignor will be liable for damages.

36
Q

With regard to Non-Assignment clauses, what happens if the clause does contain the word ‘VOID”?

A

The the assignor has neither the “power” nor the ‘right” to assign and the Assignment is ineffective.

37
Q

What is a Delegation of Duties?

A

Where the parties, at the time of contracting, do not contemplate performance by a third, non-contracting party, but subsequently, a party transfers duties under the contract to a third party.

38
Q

What is the difference between an “Assignment of Rights” and a “Delegation of Duties”?

A

“Rights” are assigned, “Duties” are delegated

39
Q

Under what two conditions would a Delegation of Duties be invalid?

A

1) the duties involve personal judgement, or 2) the delegation would materially change the Obligee’s expectations.

40
Q

In order for Duties to be properly Delegated, what is required with regard to intent?

A

Intent to delegate by the Delegator

41
Q

Within a Delegation, is any particular language required?

A

No

42
Q

Must a Delegation be in writing?

A

A Delegation can be written or oral

43
Q

If the Duty is Delegable and properly Delegated, what two things occur?

A

1) the Obligee must accept performance from the Delegatee 2) the Delegator remains a Surety for the Delegatee

44
Q

Under Delegation of Duties, what two parties may the Obligee sue?

A

1) the Delagator as a Surety 2) The Delegatee (but only if the Delegation was for consideration under a third party promise with the Delegatee being the promisor and the Obligee being the TPB

45
Q

What is Novation?

A

A new contract with the substitution of a new party

46
Q

What four elements are necessary to a Novation?

A

1) A previous valid contract 2) an agreement among all parties (including the new party) 3) immediate extinguishment of one contract, and 4) immediate enactment of a new contract

47
Q

Under a Novation, what happens to the duties of the replaced party?

A

They are discharged