BL 201 Chpt 17

What rights does a third-party beneficiary to a contract hold in regard to that contract?

If the third party is an intended beneficiary of the contract, the third party has the right to sue either the promisor or the promisee.

Which of the following may sue on a contract, to which they are not a party?

Intended beneficiaries

Which of the following are contract rights may be assigned?

Payment of $500

Which of the following elements are required of ALL intended beneficiaries?

The contracting parties were aware of the third-parties existence and position at the time of making the contract

Which of the following is an intended beneficiary to a contract?

a beneficiary of an insurance contract

When a contract has been assigned, what rights does the original contract holder (assignor) still have?

none

In determining whether a third-party is an intended or incidental beneficiary, a court may consider: (Choose two answers.)

whether the party is directly named in any part of the contract whether the party is able to control any details of the performance.

What legal limitations are imposed on parties to assignments and delegations? Choose 3 answers.

A contract cannot prevent an assignment of the right to receive funds. The assignee obtains only the rights that the assignor had under the contract. Contracts that are for a service that depends on a particular skill or talent may not be delegated.

Which of the following third-party beneficiaries have the right to enforce a contract? Choose 2 answers.

Creditor beneficiary Donee beneficiary

Elvis agrees to provide guitar lessons to Angela's niece for three months for $600. Angela decides her niece really is not interested in guitar lessons, and assigns her rights under the contract to Jose, so Jose can use the lessons for his daughter. When Jose contacts Elvis to set up the first guitar lesson for his daughter:

Jose cannot enforce the contract against Elvis because the contract is for personal services.

Midwest Life Insurance sells a life insurance policy to Thiago. Under the terms of the contract between Thiago and Midwest Life, Thiago will pay $75 per month for the policy, and, upon Thiago's death, Midwest Life will pay $100,000 to Laurelei. Four years later, Thiago dies, and Midwest refuses to pay under the terms of the policy. The party entitled to sue Midwest for its failure to honor the terms of the contract is:

Laurelei, because she is a donee beneficiary.

Daphne contracts with Speedy Builders Inc. to construct a six-foot fence around her yard. Daphne's neighbor Rando is delighted because Daphne's fence will border the north side of his property. This means he can enclose the rest of his property for a much lower price. Before construction begins, however, Speedy Builders receives an offer for another, more lucrative project, and refuses to perform the contract with Daphne. Who can sue Speedy Builders for breach of contract?

Only Daphne can sue.

When a contract duty is legally delegated, must the obligee accept performance from the delegatee?

Yes and the delegatee is obligated to perform as the delegator would have.

Frank purchases a $100,000 life insurance policy from Mutual of Omaha Insurance Co. The insured party is Frank's wife Cheryl. Frank lists Cheryl's daughter Katy as the beneficiary on the policy. Two years later, Cheryl dies, and Katy tries to collect on the insurance policy. Mutual of Omaha refuses to pay. Can Katy sue Mutual of Omaha to enforce the contract?

Yes, Katy can sue Mutual of Omaha because Katy is a donee beneficiary.

Your partner wants to make sure you are well taken care of financially in the event they die, and so takes out a life insurance policy on themselves with Liberty Life, Co., naming you as beneficiary on the policy. Unfortunately, tragedy strikes and your partner dies. However, the life insurance company refuses to pay you on the policy. Do you have the right to sue them since you were not a party to the contract?

Yes, because you are an intended beneficiary of the contract.

Third-party beneficiaries are those who:

are not party to a contract but benefit from it.

Reginald hires Sophia to deliver pizzas for his restaurant. All goes well at first. But one night, Sophia decides to go to a concert instead of delivering pizzas. She delegates her delivery tasks to Rosemary, who accepts the delegation and agrees to deliver the pizzas. However, instead of delivering the pizzas, Rosemary takes the pizzas home to her family. At the end of the evening, Reginald has many unhappy customers, and wants to sue for breach of contract to recover the income he lost for the evening. Reginald should be able to sue:

both Sophia and Rosemary.

Assuming there is no contract language prohibiting delegations, which of the following acts could likely be delegated? (Choose two answer choices.)

painting the exterior of a house to another house painter the mowing of grass in a residential neighborhood to another landscaper

A donee beneficiary is:

a third-party intended beneficiary of a contract who is not a creditor.

An assignment is the transfer of:

rights.

Will a valid delegation relieve the delegator from the contract?

No, an obligee can sue either the delegatee or the delegator for non-performance.