third party rights chapter 7. introduction only the parties to a contract have rights and...
TRANSCRIPT
Third Party Rights
Chapter 7
Introduction
• Only the Parties to a contract have rights
and liabilities under the contract.
• Exceptions:
Assignment or Delegation.
• Third party beneficiary contract
Assignments
• Assignment - Transfer of rights in a bilateral contract to a 3rd party.
• Original Contract
Obligee/Assignor
Obligor
Assignee
Assignments
Rights cannot be assigned: –If the assignment is contrary to statute. –When a contract is personal in nature. –If the assignment materially changes the rights or duties of the obligor. –If the contract stipulates the right cannot be assigned. •Valid notice must be given to all parties.
Delegation
• Contractual duties in a bilateral contract that are delegated to a 3rd party.
• Original Contract
• Duties Owed After Delegation
Obligee Obligor
Delegatee
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 oblige expectations.
When the contract expressly prohibits delegation.
Effect of a Delegation
Delegator remains liable.
Delegatee liable if delegation contract
creates a third party beneficiary relationship
in the obligee.
Third Party Beneficiaries
• Intended• Original parties to the contract intend at the• time of contracting that the contract• performance directly benefits a third person.• Incidental• Not intended to benefit from contract
(Has no rights under the contract)
Types of Intended Beneficiaries
Creditor Beneficiaries.
(Benefit conveyed to satisfy a debt)
and
Donee Beneficiaries.
(Benefit conveyed as a gift)