Exam 16: Third Parties to Contracts

Stark enters into a contract with a contractor to build a large shopping mall in River City.Donner will benefit from this contract since his restaurant is adjacent to the planned mall.Donner in this instance is a(n):

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

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.

Though contractual duties generally are delegable; a delegation will not be permitted if the nature of the duties is personal in that the obligee has a substantial interest in having the delegator perform the contract.

The right to property other than money, such as goods or land, is not assignable.

An intended donee beneficiary may enforce the contract only against the promisor.

An assignor normally guarantees that the obligor will pay the assigned debt.

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

In some states, the vesting of a third party's rights occurs only when the third party learns of the contract and assents to it.

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

Generally, rights under an option contract are not assignable.

A(n) is an intended beneficiary of a contract who receives the benefits of the contract as a gift.

A(n)

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

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:

Unless otherwise provided by statute, an assignment may be oral.

In England and in a minority of states, the first of two or more assignees to give notice to the obligor is entitled to the assigned performance.

After an assignment, only the assignee has a right to the obligor's performance.