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Flashcards in Third Party Problems Deck (42)
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Who is a third party beneficiary?

Someone who benefits from the contract of two other parties, with the common intent to benefit the third party.


Who is the promisor in a third party beneficiary case?

The person who is making the promise that benefits the third party.


Who is the promisee in a third party beneficiary case?

The person who obtains the promise that benefits the third party.


Do incidental third party beneficiaries have contract law rights?

No, only intended beneficiaries.


Can a party to a third party beneficiary contract cancel the contract?

If the third party knows or has relied upon or has assented as requested, her rights have vested and the contract may not be modified or canceled unless the contract otherwise provides.


Can a beneficiary recover from the promisor?



Can the promisee recover from the promisor?



Can the beneficiary recover from a promisee?

No, unless creditor beneficiary but only on pre-exiting debt.


Can T recover from B if B owed T $100 before B ordered the grits to satisfy that
debt and the grits were never delivered?

yes preexisting debt from creditor promisee


What defenses are available against a third party beneficiary?

THe promisor can assert any defense that he would have had if sued by the promisee.


What is an assignment?

A transfer of rights under contracts.


What are the steps of an assignment?

1) contract between only two parties and 2) one of the parties later transfers rights under that contract to a third party.


Can offers be assigned?



Who is the assignor?

Party to the contract who later transfers rights under the contract


Who is the assignee?

Not a party to the contract. Able to enforce the contract because of the assignment.


Who is the obligor?

other party to the contract.


What are the limitations of an assignment?

Contractual provisions.


What is the effect of a prohibition on assignment in a contract?

It takes away the right to assign but not the power to assign. Which means that the assignor is liable for breach of contract, but an assignee who does not know of the prohibition can still enforce the assignment.


What words function as a prohibition on assignment?

Rights hereunder are not assignable


Batman-Gotham contract provides “rights hereunder are not assignable.”
Notwithstanding this contract provision, Batman assigns the right to the $300,000
payment to Robin who does not know about the contract provision. Can Robin
collect from Gotham?

Yes, because even though there was a provision sayng that rights were not assignable, Robin did not know about it and therefore has all the rights of an assignee. Gotham can sue Batman though.


What is the effect of an invalidation on an assignment?

Language of an invalidation takes away both the right to assign and the power to assign, so that there is a breach by the assignor and the assignee has no rights.


What are the words that function as an invalidation of an assignment?

all assignments of rights under this contract are void.


If there is any doubt as to whether an invalidation or a prohibition go with prohibition

Epstein Hint


What if there are no words in the contract or fact pattern regarding assignability?

Common law bars an assignment that substantially changes the duties of the obligor.


IS the assignment of the right to payment a substantial change?



Gotham assigns its rights to security services under the contract with Batman to
Metropolis, i.e. Batman is to defend Metropolis, not Gotham. Does this
substantially change the duty of the obligor so that the assignment is not

Yes, b/c under the original contract Batman was to protect Gotham and not Metropolis. Batman is the obligor, he is obligated to protect Gotham. Thus the assignment is invalid.


What are the requirements for an assignment?

Generally considedration is not required, but gratuitous assignments (and only gratuitous assignments) can be revoked.


What kind of assignments can be revoked?

Only gratuitous ones.


Who can an assignee recover from?

The obligor


Can an assignor FOR consideration recover from obligor?