Contracts 8

Card Set Information

Author:
paul
ID:
23225
Filename:
Contracts 8
Updated:
2010-07-03 22:09:24
Tags:
Third Party Problems
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Description:
Contracts 8 - Third-Party Problems
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  1. What is the rule on ENTRUSTMENT?

    (i.e., when does an owner have rights against a third-party?)
    An owner who entrusts goods to a MERCHANT who deals in goods of the kind has NO RIGHTS against a bona fide purchaser

    Facts to watch for

    • 1) Merchant who
    • 2) Deals in goods
    • 3) of the kind

    Thus, if any of those three are missing, the owner has rights against the third-party
  2. THIRD-PARTY BENEFICIARIES

    When can a TPB enforce a contract?
    an INTENDED beneficiary can enforce the contract once his/her RIGHTS HAVE VESTED

    Notes—

    • 1) rights become vested when the TPB knows about the K or when he/she benefits from it
    • 2) only the INTENDED TPB has rights
    • 3) once vested, the intended TPB must consent to any modifications or recessions of the K
    • 4) promisor is liable to intended TPB for breach
    • 5) promisee is liable to intended TPB for promisor's breach if TPB was also a CREDITOR beneficiary (i.e., promisee's purpose was to satisfy debt to TPB) [rare]
  3. DELEGATION OF DUTIES

    1) What is the general rule?
    2) What are the exceptions?
    Can delegate without consent of obligee (person to whom performance is owed)

    EXCEPTIONS (delegation w/o consent will be a breach of K)

    • 1) contrary language in K, or
    • 2) special skills or reputation
  4. ASSIGNMENT OF RIGHTS
    • Need language of a PRESENT ASSIGNMENT (mere promise to assign in the future is not effective)
    • Can't SUBSTANTIALLY increase obligor's duties
    • Last-in-time GRATUITOUS assignment prevails
    • FIRST-in-time PAID-FOR assignment prevails against all others (EXCEPT where subsequent assignee for consideration (i) does not know of prior assignment, and (ii) is first to get payment or a judgment against obligor)

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