Exam 16: Third Parties to Contracts

Which of the following involves an invalid assignment that a court would not enforce?

Alma sells her car to Ervin.Since she still has four months left on her automobile insurance policy,she tells Ervin he will be covered for this four-month period under the policy.This purported assignment of her policy is effective as long as she notifies her insurance company about the change of insureds.

A promisor may assert the defense of contractual modification or rescission,even if an intended beneficiary's rights have vested.

A creditor beneficiary is a type of incidental beneficiary.

The party to whom a contractual duty of performance is owed is known as the:

Barbara owes Arturo $2,000.On July 1,Arturo assigns the debt to Charles.Thereafter on July 15,Arturo assigns the same right to Dennis,who in good faith gives value for it and knows nothing about the first assignee.Dennis immediately notifies Barbara of the assignment.Under:

In a third-party beneficiary contract,the third party's rights arise after the contract is made.

Bill has a right against Heather and assigns it for $100 to Dan.Later,Bill grants Heather a release.Bill:

Mary goes to a stockbroker,purchases 50 shares of a certain stock,and instructs the broker to register the stock in her husband Warren's name.If this stock is intended as a Valentine's Day gift,Warren becomes a(n):

Donee beneficiaries and incidental beneficiaries are called intended beneficiaries.

As a general rule,most contract rights are assignable.

Brice owns a parcel of land that is encumbered by a mortgage held by the First National Bank.Brice agrees to sell the land to Paul for $50,000.Brice and Paul together go to the First National Bank to discuss the sale and purchase with the banker.Brice,Paul,and the banker sign an agreement stating that Paul will assume the mortgage and that Brice will be discharged from all further liability on the mortgage.In this case:

The Restatement adopts the majority American rule and provides that,where there are successive assignments of the same right,the first assignee in point of time prevails.

Give an example of an assignment of rights and explain the relationship of the parties.

Ben promises to sell five acres of his land to Tomas for $8,000.If Ben transfers his right to the $8,000 to Firewood Financial,Ben is the assignee and Tomas is the obligor.

When contract terms prohibiting the assignment of rights exist,most courts will:

Name four nonassignable contract rights found in Restatement (Second)of Contracts,Section 317(2).

Third party rights in contracts can arise by assignment of rights,delegation of duties,or express terms in third party beneficiary contracts.