Rights and Duties of Third Parties to the Contract

Question 1

The best test for determining whether someone is an intended third-party beneficiary is to ask:

Answer 1

To whom is performance to be given according to the language of the contract?

Question 2

If an assignee for value discovers that the assignor had previously assigned the same contract rights to another party for value, the assignee may _________.

Answer 2

sue the assignor for breach of warranty

Question 3

As a general rule, if the promisor fails to perform under a contract, a third-party beneficiary whose rights have vested may sue the promisee if the third-party beneficiary is _____________.

Answer 3

a creditor beneficiary

Question 4

As a general rule, if the promisor fails to perform under a contract, a donee third-party beneficiary whose rights have vested can sue:

Answer 4

the promisor

Question 5

A and B enter into a contract under which A will service B’s car for $500. If, despite a clause prohibiting assignment of “the contract” by the parties, A assigns the contract to C, what is the result?

Answer 5

C has the right to the $500, but A has the obligation to service B’s car