Blaw ch 16

Intended or incidental Beneficiary

1. Reasonable person test- a beneficiary is intended if a reasonable person in his position would believe that he promisee intended to confer on the beneficiary the right to sue to enforce the contract. 2. Other factors indicating an intended beneficiary:1. performance is rendered directly to the third party, or 2. the third party is expressly designated as beneficiary in the contract.

3. The effect of an assignment

1.Rights of the assignor are extinguished; 2. assignee has a right to demand performance from the obligor; and 3. assignee's rights are subject to defenses the obligor has against the assignor

1.Types of intended beneficiaries

A. Creditor beneficiaries- a creditor beneficiary benefits from a contract in which a promisor promises to pay a debt that the promisee owes to him. B. Donee beneficiaries- benefits from a contract made for the express purpose of giving a gift to him. the modern view is not to distinguish between types of intended beneficiaries.

6. Notice of assignment- is effective immediately, with or without notice

A. Same right assigned to more than one party- If the assignor assigns the same right to different persons, in most states, the first assignment in time is the first in right. In some states, priority is given to the first assignee who give notice. B. Discharge before notice- Until an obligor has notice, his or her obligation can be discharged by performance to the assignor. Once the obligor has notice, only performance to the assignee can act as a discharge.

5. Rights that cannot be assigned

A. When a statute prohibits assignments- ex. future workers comp. benefits. B. When a contract is personal in nature- the rights under the contract cannot be assigned unless all that remains is a money payment. C. When an assignment will sig. change the risk or duties of obligor. ex. sells car, assigns right to buyers friend. D. When a contract prohibits assignments- exceptions to exceptions: 1. A right to receive money 2. Rights in real estate 3. Rights in negotiable instruments 4. A right to receive damages for breach of a sales contract or for payment of amount owed under it.

2. Duties that cannot be delegated

A. When the duties are personal in nature- its performance depends on the personal skill or talents of the obligor, or special trust has been placed in the obligor. C. Performance by a third party will vary materially from that expected by the obligee- The obligee is the one to whom performance is owed under a contract. C. When the contract prohibits delegation

Third party Beneficiaries- only intended beneficiaries acquire legal rights in a contract

A. intended beneficiaries: An intended beneficiary is one for whose benefits a contract is made. if the contract is breached he can sue the promisor.

Assignments and Delegations

Assignment and delegation occur after the original contract is made, when one of the parties transfers to another party an interest or duty in the contract.

2. How assignments function

Assignments are involved in much business financing. The most common contractual right that is assigned is the right to the payment of money.

Delegations

Duties are delegated. The party making the delegation is the delegator. the party to whom the duty is delegated is the delegatee.

Incidental Beneficiaries

The benefit that an incidental beneficiary receives from a contract between other parties is unintentional. An incidental beneficiary cannot enforce a contract to which he is not a party.

3. Effect of a delegation

The obligee must accept performance from the delegatee, unless the duty is one that cannot be delegated. if the delegatee fails to perform, the delegator is liable

2. When the rights of an intended beneficiary vest

To enforce a contract against the original parties, the rights of the third party must vest. The rights take effect when, 1. the third party materially alters his position in justifiable reliance, 2. The third party files a suit on the promise or 3. the third party manifests assent to the contract.

Assignments of "all Rights"

a contract that provides in general words for an assignment of all rights is both an assignment of rights and a delegation of duties.

4.Form of the assignment

can be oral or written. assignments covered by the statute of frauds must be in writing to be enforceable. most states require contracts for the assignment of wages to be in writing.

4. Liability of the delegatee

if the delegatee makes a promise of performance that will directly benefit the obligee, there is an "assumption of duty". Breach of this duty makes the delegatee liable to the obligee, and the obligee can sue BOTH the delegatee and the delegator.

1. What an assignment is

parties to a contract have rights and duties. one party has a right to require the other to preform, and the other has a duty to preform. The transfer of the right to a third person is an assignment.

1. Form of delegation

the is no special form that is required.

Assignments

transaction where delige signs rights over to assignee

3. Modification or rescission of the contract

until a third party's rights vest, the others con modify or rescind the contract without the third partys consent. if a contract reserves the power to rescind or modify, vesting does not terminate the power.