Third-Party Rights

Question 1

Third Party Beneficiaries

Answer 1

Two parties to a contract can name a third party in the contract as a beneficiary. The 3p is not a party to the contract, but is able to enforce the contract others made for his benefit.

Question 2

Third party beneficiary right to enforce contract

Answer 2

IN order to enforce her rights under a contract, a TPB’s right must first vest. Vesting of rights occurs when either, 1) TPB assents to the promise, 2) TPB brings suit to enforce promis, or 3) TPB materially changes position in justifiable reliance on the promise. If TPB vests, the contract cannot be canceled or modified without TPB consent unless the contract states otherwise.

Question 3

Enforcing the contract

Answer 3

The TPB can sue the promisor directly, however, the promisor can assert any defenses he may have had against the promisee.

Question 4

Assignemnts

Answer 4

An assignment is the transfer of contract rights by one party to a 3rd party in a secondary contract. Assignments are generally valid if the obligor has notice. However, assignments are iunvalid if 1) it materially alters the obligor’s duty or risk, 2) it is for future rights based on future contracts, or 3) it is prohibited by a “no assignment provision” or by law. Gratuitous assignments are allowed, but onliy assignments for consderation cannot be revoked.

Question 5

Delegations

Answer 5

A delegation is a transfer of contract duty by one party to a third party in a secondary contract. Duites can be freely delegated except, 1) where prohibited by contract, 2) where the duties involve special skill or personal judgement. The obligee may sue the delegator the the delegate (if consideration received) for breach of contract.