Chapter 16

Duties of the Parties

1. Delegation- delegator is still bound to perform original obligation 2. Novation Contract- a substituted contract to which the promisee is a party which substitutes a new promisor for an existing promisor, who is consequently no longer liable on the original contract and is not liable as a delegator

Parts of Intended Beneficiaries

1. Donee Beneficiary- a third party intended to receive a benefit from the contract as a gift 2. Creditor Beneficiary- a third person intended to receive a benefit from the contract to satisfy a legal duty owed to him 3. Rights of Intended Beneficiary- an intended donee beneficiary may enforce the contract against the promisor; an intended creditor beneficiary may enforce the contract against either or both the promisor and the promisee 4. Vesting of Rights- if the beneficiary's rights vest, the promisor and promisee may not thereafter vary or discharge these vested rights

Requirements of an Assignment

Include intent but not consideration 1. Revocability of Assignment- when the assignee gives consideration, the assignor may not revoke the assignment without the assignee's consent 2. Partial Assignment- transfer of a portion of contractual rights to one or more assignees

Third-Party Beneficiary Contracts

a third-party beneficiary contract is one in which one party promises to render a performance to a third person (the beneficiary)

Express Warranty

explicitly made contractual promise regarding contract rights transformed

Defenses Against Beneficiary

in an action by the intended beneficiary to enforce the promise, the promisor may assert any defense that would be available to her if the action had been brought by the promisee

Delegable Duties

most contract duties may be delegated except 1. duties that are personal 2. duties that are expressly nondelegable 3. Duties whose delegation is prohibited by statute or public policy

Implied Warranties

obligation imposed by law upon the assignor of a contract right

Rights of assignee

the assignee stands in the shoes of the assignor 1. Defenses of obligor- may be asserted against the assignee 2. Notice- is not required but is advisable

Successive Assignments of the same rights

the majority rule is that the first assignee in point of time prevails over later assignees; minority rule is that the first assignee to notify the obligor prevails

Intended Beneficaries

third parties intended by the two contracting parties to receive a benefit form their contract

Incidental Beneficiary

third party whom the two parties to the contract have no intention of benefiting by their contract and who acquires no rights under the contract

Definition of Delegation

transfer to a third party of contractual obligation 1. Delegator- party delegating his duty to a third party 2. Delgatee- third party to whom the delegator's duty is delegated 3. Obligee- party to whom a duty of performance is owed by the delegator and delegate

Definition of Assignment and parts

voluntary transfer to a third party of the rights arising from a contract so that the assignor's right to performance us extinguished 1. Assignor- party making an assignment 2. assignee- party to whom contract rights are assigned 3. Obligor- party owing a duty to the assignor under the original contract 4. Obligee- party to whom a duty of performance is owed under a contract

Most Contract rights are assignable except ?

1. Assignments that materially increase the duty, risk, or burden upon the obligor 2. Assignments of personal rights 3. Assignments expressly forbidden by the contract 4. Assignments prohibited by law