Contracts - Parties

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  1. Third Party Beneficiary?
    • Two parties contracting with common intent to benefit a 3rd party, the beneficiary.
    • *one contract
  2. Intended vs. Incidental 3rd party beneficiary Beneficiary?
    • 1) generally identified in the K
    • 2) Receives performance directly from promisor
    • 3) Has some relationship w/ promisee to indicate intent to benefit
    • Only intended beneficiaries have K law rights
  3. Creditor or Donee 3rd party beneficiary?
    • 1) Assumption: Donee beneficiary
    • 2) Look at whether third-party beneficiary was a creditor of the promisee before the contract.
  4. Can a K be modified or cancelled, when there is a 3rd party beneficiary?
    • Before 3rd party’s rights vest, K can be modified w/o his consent.
    • If vested, K cannot be cancelled or modified without 3rd party's consent, unless K says otherwise.
  5. When have the third party beneficiary's rights vested?
    • 1) Beneficiary manifests assent [in a manner invited or requested by the parties]
    • 2) Beneficiary sues to enforce its rights
    • 3) Beneficiary learns of the K and detrimentally relies on it
  6. Who can sue whom, in a 3rd party beneficiary case?
    • 1) Beneficiary can sue Promisor
    • Promisor can raise any defense she has against Promisee
    • 2) Promisee can sue Promisor [specific performance included]
    • 3) Beneficiary generally cannot sue Promisee
    • ------a) Creditor Beneficiary can sue both Promisee and Promisor, but limited to one satisfaction, only on pre-existing debt.
    • ------b) Donee beneficiary cannot sue Promisee unless foreseeable detrimental reliance, and beneficiary reasonably relied on it
  7. What is an Assignment of rights?
    • 1) transfer of contract rights
    • 2) by one party to a third party
    • 3) by another contract
    • Assignor: party to K who later transfers rights under K to another
    • Assignee: not party to K, able to enforce K b/c of assignment
    • Obligor: other party to K
  8. When are rights assignable?
    • Rights are generally assignable unless
    • 1) assignment substantially changes obligor's duty or risk;
    • 2) assignment is for future rights based on future contracts; or
    • 3) assignment is prohibited by a non-assignment provision, or by law
  9. Prohibition against assignment?
    • Prohibition: takes away right to assign, but not power to assign
    • “rights hereunder are not assignable”
    • Assignee can still enforce K (if didn’t know of prohibition)
  10. Invalidation against assignment?
    • Invalidation: takes away both right AND power to assign
    • “all assignments under this contract are void/disregarded”
    • Assignee, no rights
  11. Requirements contracts, assignable?
    • Generally, right to receive goods under a requirement contract is not assignable because the obligor’s duties could change substantially.
    • However, the UCC allows the assignment of requirements contracts if the assignee acts in good faith not to alter the terms of the contract.
  12. What can you assign, what is a substantial change to duty or risk?
    • 1) Can assign right to be paid (right to be paid is never a substantial change)
    • 2) Can’t assign right to performance (not involving a payment)
  13. Is consideration required to assign?
    • Consideration not required to assign; but gratuitous assignments can be revoked.
    • Generally, assignment for consideration is irrevocable.
  14. Assignments for consideration have implied warranties of what assignor will do:
    • 1) Right assigned actually exists
    • 2) Right assigned not subject to defenses by obligor
    • 3) Assignor wont do anything to impair value of assignment (but no warranty of what obligor will do)
  15. How to revoke gratuitous assignment?
    • Gratuitous assignment can be revoked by the assignor taking performance directly from the obligor.
    • However, cannot revoke when assignor is estopped because he should reasonably foresee the assignee changed position in reliance on the assignment to his detriment.
  16. Assignee suing Obligor?
    • 1) can sue under the K
    • 2) obligor can raise any defenses against assignee that it would have against assignor
  17. Assignor for consideration suing obligor?
    • cannot recover from obligor
    • Assignment for consideration cannot be revoked
  18. Assignee suing Assignor
    • 1) can sue if irrevocable
    • 2) assignor not liable if obligor unable to perform; assignor does not warrant that the obligor will perform
  19. Multiple assignments? w/irrevocable assignment
    • assignments for consideration, first assignee in time wins, except if subsequent assignee
    • 1) pays for value
    • 2) is unaware of earlier assignment, and
    • 3) is first to obtain payment, judgment, novation, or ownership
  20. Multiple assignments w/revocable assignment?
    • when it's ONLY gratuitous assignments, last assignee in time wins, except if
    • 1) gratuitous assignment is irrevocable
    • 2) assignee receives ownership, or
    • 3) assignee reasonably and detrimentally relied
  21. Delegation of duties definition?
    Transfer of duty created in one contract to a third party by another contract
  22. Duties are generally delegable, except?
    • 1) involves special (personal) skill or special reputation of delegator [requires a novation]
    • 2) substantially alters obligee's risks
    • 3) special trust was reposed in delegator, or
    • 4) K prohibits delegation OR assignment [no assignment = no delegation]
  23. Novation?
    • 1) new K
    • 2) replacing a valid K
    • 3) with all parties agreeing
    • 4) to release one original party and substituting a new party, and
    • 5) extinguishing the old K
  24. Obligee v. Delegator
    Delegating party always remains liable if delegatee fails to perform
  25. Obligee v. Delegatee
    • Delegatee is liable ONLY if she receives consideration from delegator
    • Note: because Delegation for consideration creates a 3rd party beneficiary obligation!
Card Set:
Contracts - Parties
2014-07-15 21:26:58
Contracts Parties

Contracts - Parties
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