Business law chapter 16

Definition of Assignment of Rights

voluntary transfer to a third party of the rights arising from a contract so that the assignor’s right to performance is extinguished.

Assignor (Assignment of Rights)

party making an assignment

Assignee (Assignment of Rights)

party to whom contract rights are assigned

Obligor (Assignment of Rights)

party owing a duty to the assignor under the original contract

Obligee (Assignment of Rights)

party to whom a duty of performance is owed under a contract

Requirements of an Assignment (Assignment of Rights)

include intent but not consideration

Revocability of Assignment (Assignment of Rights)

When the assignee gives consideration, the assignor may not revoke the assignment without the assignee’s consent.

Partial Assignment (Assignment of Rights)

transfer of a portion of contractual rights to one or more assignees

Assignability (Assignment of Rights)

Most contract rights are assignable, except:

–  Assignments that materially increase the duty, risk, or burden upon the obligor.

–  Assignments of personal rights.

–  Assignments expressly forbidden by the contract.

– Assignments prohibited by law.

Rights of Assignee (Assignment of Rights)

the assignee stands in the shoes of the assignor

Defenses of Obligor (Rights of Assignee)

may be asserted against the assignee

Notice (Rights of Assignee)

is not required but is advisable

Implied Warranty (Assignment of Rights)

Obligation imposed by law upon the assignor of a contract right

Express Warranty (Assignment of Rights)

explicitly made contractual promise regarding contract rights transferred

Successive Assignments of the Same Right (Assignment of Rights)

The majority rule is that the first assignee in point of time prevails over later assignees; minority rule is that the first assignee to notify the obligor prevails.

Definition of Delegation

transfer to a third party of a contractual obligation

Delegator (Delegation of Duties)

party delegating his duty to a third party

Delegatee (Delegation of Duties)

third party to whom the delegator’s duty is delegated

Obligee (Delegation of Duties)

party to whom a duty of performance is owed by the delegator and delegatee

Delegability (Delegation of Duties)

Most contract duties may be delegated, except:

–  Duties that are personal.

–  Duties that are expressly nondelegable.

–    Duties whose delegation is prohibited by statute or public policy.

Delegation (Duties of the Parties)

delegator is still bound to perform original obligation

Novation (Duties of the Parties)

contract, to which the obligee is a party, substituting a new promisor for an existing promisor, who is consequently no longer liable on the original contract and is not liable as a delegator.

Definition of Third-Party Beneficiary Contracts

A contract in which one party promises to render a performance to a third person (the beneficiary).

Intended Beneficiaries (Third-Party Beneficiary Contracts)

Third parties intended by the two contracting parties to receive a benefit from their contract.

Donee Beneficiary (Intended Beneficiaries)

A third party intended to receive a benefit from the contract as a gift

Creditor Beneficiary (Intended Beneficiaries)

A third person intended to receive a benefit from the agreement to satisfy a legal duty owed to her.

Rights of Intended Beneficiary (Intended Beneficiaries)

An intended donee beneficiary may enforce the contract against the promisor; an intended creditor beneficiary may enforce the contract against against either or both the promisor and the promisee.

Vesting of Rights (Intended Beneficiaries)

If the beneficiary’s rights vest, the promisor and promisee may not thereafter vary or discharge these vested rights.

Defenses Against Beneficiary (Intended Beneficiaries)

In an action by the intended beneficiary of a third-party contract to enforce the promise, the promisor may assert any defense that would be available to her if the action had been brought by the promisee.

Incidental Beneficiary (Third-Party Beneficiary Contracts)

Third party whom the two parties to the contract have no intention of benefiting by their contract and who acquires no rights under the contract.