1 / 15

Chapter 15 Contracts: Third Party Rights

Chapter 15 Contracts: Third Party Rights . Introduction. Only the Parties to a contract have rights and liabilities under the contract. Exceptions: Assignment or Delegation. Third party beneficiary contract. §1: Assignments and Delegations.

Sophia
Download Presentation

Chapter 15 Contracts: Third Party Rights

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 15 Contracts: Third Party Rights

  2. Introduction • Only the Parties to a contract have rights and liabilities under the contract. • Exceptions: • Assignment or Delegation. • Third party beneficiary contract.

  3. §1: Assignments and Delegations • Transfer of contractual rights is an assignment. • Transfer of contractual duties is a delegation.

  4. Obligee/ Assignor Obligor Original Contract Formed Assignment Duties Owed After Assignment Assignee Assignments Assignment - Transfer of rights in bilateral contract to 3rd party.

  5. Assignments • Rights cannot be assigned: • If the assignment is contrary to statute. • When a contract is personal in nature. • Assignment materially changes rights or duties of obligor. • If the contract stipulates the right cannot be assigned. Case 15.1:Forest Commodity v. Lone Star (2002). • Valid notice must be given to all parties. • Case 15.2:Gold v. Ziff Communications (2001).

  6. Obligee Obligor Original Contract Formed Duties Owed After Delegation Delagatee Delegation • Contractual duties in a bilateral contract that are delegated to a 3rd party.

  7. Duties That Cannot be Delegated • When special trust has been placed on the obligor. • When performance requires personal skill or talents. • When performance will vary materially from obligee expectations. • When the contract expressly prohibits delegation.

  8. Effect of a Delegation • Delegator remains liable. • Delegatee liable if delegation contract creates a third party beneficiary relationship in the obligee.

  9. Assignment of “All Rights” • Assignment of rights and a delegation of duties.

  10. §2: Third Party Beneficiaries Original parties to the contract intend at the time of contracting that the contract performance directly benefits a third person.

  11. Types of Intended Beneficiaries • Creditor Beneficiaries. • Donee Beneficiaries. • Modern View: Does not draw such clear lines and distinguishes only between intended beneficiaries and incidental beneficiaries.

  12. The Vesting of an Intended Beneficiary’s Rights • For third party beneficiary contract to be effective, rights under the contract must vest: • Third party’s manifesting assent to the contract. • Third party’s materially altering position in detrimental reliance on the contract.

  13. Intended v. IncidentalBeneficiaries • Intended: • Promisee intended to confer on the beneficiary the right to bring suit to enforce the contract. • Factors: • Performance is rendered directly to 3rd party. • 3rd party’s right to control contract details. • 3rd party expressly designated as beneficiary.

  14. Intended v. IncidentalBeneficiaries [2] • Incidental. • Contract between two parties is unintentional. • Incidental beneficiary cannot sue to enforce the contract. • Case 15.3:Vogan v. Hayes Appraisal Associates, Inc. (1999).

  15. Law on the Web • “SmartAgreements” website. • New York Law Journal article on assignments. • Legal Research Exercises on the Web.

More Related