Page 64 Flashcards
What are the rights of an assignee after a contract has been assigned?
He has a right of action to enforce the contract against the original obligor
What rights does the original obligor have against an assignee once an assignment of a contract has happened?
The assignee stands in the same relation to the obligor as the assignor did, so the same rights, terms, and defenses all apply.
If the original parties to an agreement modify it after an assignment has happened, what must the assignee do?
He is bound by the modification unless the obligor had prior notice of the assignment
What is a holder in due course?
An assignee that takes the claim for value, in good faith, without notice of any defenses. Obligor can’t assert any contract related defenses against the holder, except for a few limited defenses relating to formation like incapacity and duress
When would an obligor be estopped from raising defenses?
If he represented to the assignee that none existed or that they wouldn’t be asserted, and the assignee relied on that to his detriment
What are the three implied warranties in any assignment supported by consideration that are made by the assignor?
- warranty of enjoyment
- warranty of rights and defenses
- warranty of document
What is a warranty of enjoyment that assignor makes to an assignee?
Implied warranty that the assignor has made no prior assignments of the same right and that he won’t do anything to interfere with the assignee’s enjoyment of the right. If he later assigns it, that violates this warranty
What is the warranty of rights and defenses for an assignment?
A warranty that the rights assigned actually exist and aren’t subject to any defenses or limitations.
What is the warranty of document for assignments?
Warranty that any writing or document associated with the assignment is genuine.
Until the obligor has notice of an assignment, what is the validity for any changes that are made to the assigned right?
Any changes are invalid
If a person gives the same interest to multiple assignees, and any of those assignments were gratuitous, what happens when a later assignment is made?
It is automatically revoked by the later assignment unless the person has detrimentally relied
What is the validity of each person’s right is the same assignment was made to multiple people?
- Annie gets a gratuitous assignment
- Bobby gave consideration
- Candy’s was gratuitous, but she changed position based on it
Annie’s is invalid, but the rest are OK and they can compete for the right.
The rule is first in time wins unless a later one that doesn’t know about the previous ones does one of these four things:
- pays
- gets a judgment
- has indicia of ownership (check or paper)
- gets a novation (obligor agrees to pay him directly)
Then the other assignees can sue the assignor for breach of warranty of assignment
When would an assignment be voidable?
If there is infancy, duress, insanity
When can a partial assignee sue?
If all of the interested parties are joined
If an assignor assigns rights under a contract but keeps performing, and notice of the assignment is given, and the assignor and obligor modify in good faith, what are the two different views about how that affects the assignee’s rights?
- traditional: doesn’t affect his rights
- modern/UCC: if the modification hasn’t been fully earned by performance, it is effective against the assignee if it was made in good faith. If it has been fully earned, it is effective if made in good faith and if no notice of it was given to the obligor
