Third Parties

Question 1

Third Party Contract Problems

Answer 1

• Third Party Beneficiary
• Assignment (rights)
• Delegation (duties)
• Novation (substituted parties)

Question 2

Third Party Beneficiaries

Answer 2

• Intentional (rights)
  
  • Donee (promisor)
  • Creditor (promisor/promisee)
• Incidental (none)
• Modify/Revoke?
  
  • Yes, unless vested through:
    
    • Reliance
    • Assent
    • Lawsuit

Question 3

Assignment

Answer 3

Rights under a contract generally transferable.

Contract prohibits/invalidates assignment:

• Prohibits
  
  • Breach + valid assignment
  • Assignee can sue
• Invalidates
  
  • No assignment (“void”)
  • Assignee cannot sue

Multiple assignments:

• no consideration: last in time
• consideration: first in time
  
  • first BFP for value w/o knowledge of prior assignments who collects or initiates legal action

Question 4

Delegation

Answer 4

Duties generally delegable, except when prohibited by contract requiring special skill/taste.

Obligee (promisee) can recover against delegator and delagatee.

Novation required for delegator to escape liability.

Question 5

Novation

Answer 5

Novation is a new agreement substituting a new party for a party to a contract. Similar to assignment + delegation, except that assignor/delegor is relieved of rights and liablity under the original contract.