Buslaw13-Third Parties in Contract Law

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1. Differentiate between the legal rightsgiven to intended beneficiaries and thosegive to incidental beneficiaries.

2. Contrast assignment with delegation.

3. Identify the three parties to anassignment.

4. Indicate who is responsible for giving

notice of an assignment and explain the

consequences of failing to do so.

THIRD PARTIES IN

CONTRACT LAW

Chapter Outcomes:

Chapter 13



5. Explain the obligations of the parties to an

assignment.

6. Identify contracts that cannot be assigned.

7. Distinguish between a novation and anassignment.

THIRD PARTIES IN

CONTRACT LAW

Chapter 13

Chapter Outcomes (continued):



Contracts and Third Parties

1313--11

Intended Beneficiaries

Incidental Beneficiaries



1313--11

1. The name given to a third

party who provides no

consideraton for the benefits

received and who owes the

contracting parties no legalduty is a donee beneficiary.

Topic Quiz

TRUE

Answer the following true/false questions:



1313--11

2. An outside party for whose benefit a

contract was not made, but who wouldsubstantially benefit if the agreement

were performed is an i ntend ed

beneficiary.

Topic Quiz

FALSE


An i nci d ental beneficiary.



1313--11

3. A third party to whom one or

both contracting parties owe a

debt of obligation arising froma contract is a cred it or

beneficiary.

Topic Quiz

TRUE




Assignment of Contracts

Assignment and DelegationParties to Assignment

Consideration in Assignment

Method of Assignment

1313--22



Assignment of Contracts(continued)

Rights and Duties of theAssignee

Liabilities and Warranties of the

Assignor

Restrictions on Assignments

1313--22



LawLINKS

Chapter 13Chapter 13

Check out

http://www.azleg.state.az.us/ars/47/2210.html

for information about delegation of

performance and assignment of rights.



LawLINKS


R ead about the protection given to

subcontractors on federal construction

contracts at

http://www.silverlink.net/donowen/far32.html



A Question of Ethics

Joliet¶s oral agreement in Example 13-7

to assign the contract to Parenti was

unenforceable because of the equal

dignities rule. Is the equal dignities rule just and fair? How do you feel about the

legality of someone breaking an oral

promise? Why does the law have such aprovision? Is it ethical? What has

happened to the old fashioned saying

that a person¶s word is his/her bond?

1313--11



LawLINKS


For examples of assignment forms, go to

Internet Legal R esource Guide Legal Forms

Archive at

http://www.ilrg.com/forms/index.html

Scroll down to No. 8 Transfer and Assignments

and click on one of the forms listed.



1313--22

1. In general, rights are delegated and

duties are assigned.

Topic Quiz

FALSE


Rights are assigned and duties are

delegated.



1313--22

2. The outside third party to whom the

assignment is made is the assignor.

Topic Quiz

FALSE


The assignee.



1313--22

3. Consideration is not required

in the assignment of a contract.

Topic Quiz

TRUE




Novation

A substitution, by mutualagreement, of a new party for

one of the original parties to a

contract.

1313--33



1313--33

1. When a party to a contract

assigns all rights and delegates

all duties to a third party, the

assignor remains liable to the

obligor.

Topic Quiz

TRUE




1313--33

2. When there is a novation, the

assignor no longer remains

liable to the obligor.

Topic Quiz

TRUE




1313--33

3. A novation requires the agreement of

any two of the three parties to anassignment.

Topic Quiz

FALSE


Requires all three.



1313--11 Third parties are, at times, given benefits

through a contract made between two other

parties.

The transfer of contract rights to a third partyoutside the original agreement is an

assignment.

1313--22

SUMMARY

1313--33 A novation occurs when two contractingparties agree to replace one of the parties with

a new party.



Chapter 13Chapter 13Key Terms

assignee assignment

assignor beneficiary

creditor beneficiary delegation

donee beneficiary incidental beneficiary

intended beneficiary novation

third party obligor

outside party warrantyfraudulent conveyance



Investigating on the Internet

Chapter13Chapter13

You will find an assignment of contract

form at

http://www.ilrg.com/forms/assgn.con.html

Print out the form and place it in your

notebook along with your other notes on thissubject.



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Buslaw13-Third Parties in Contract Law

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