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privity of contract

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the state of two specified parties being in a contract.

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Cases for a third party

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Assignees to whom rights are subsequently transferred and intended third parties beneficiaries to whom the contracting parties intend to give rights under the contract at the time of contracting.

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assignment of a right

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parties to a contract can transfer their rights to a third party.

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obligor

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owes the duty of performance under contract

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Obligee

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Party who is owed a right under a contract.

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assignor

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the obligee who assigns the right of the contract to an assignee. A new contract is created

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Assignee

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the party to whom the right has been transferred.

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Subassignee or subsequent assignee

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The party to whom the first assignee transfers the right of the contract.

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Personal service contract

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generally not assignable. Actors, or singers contracted to perform in a specific hall or theater

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assignment of future right

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a party can not assign a nonexistent right that they expect to have in the future

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contract where an assignment would materially alter risk

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laura has a safe driving record and takes out an insurance policy. That policy cannot be assigned to another as they may be more risky.

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assignment of legal action

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the right to sue another party for a violation of personal rights cannot usually be assigned. Donald is injured in an accident. He may sue for negligence. legal rights can be assigned: Creditors assigning rights to payment to a collection agency.

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effect of an assignment of a right

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the unconditional assignment of a contract right extinguishes all the assignor's rights, including the right to sue the obligor directly for nonperformance.

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notice of assignment

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when the assignor makes an assignment to the assignee, the assignee must notify the obligor. If the assignee does not notify the obligor and the obligor pays the obligee (assignor) then the assignee's only recourse would be to sue the obligee (assigor) for damages. If the obligor was notified, then assignee can sue.

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anti assignment clause

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Prohibits any assignments of the obligee

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Approval clause

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clause in a contract that requires the obligor to approve and third party assignments.

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successive assignments

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when the obligee assigns the same rights to more than one party. Three rules: American rule, English rule, possession of tangible token rule

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American rule

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The first assignment in time prevails regardless of who notifies the obligor first. The other assignee can sue the obligee for damages.

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English rule

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The first assignee to notify the obligor gets payment. The other assignee can sue the obligee for damages.

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possession of tangible token rule

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provides that under the english or american rule, if the assignor makes successive assignments of a contract right that is represented be a tangible token, such as stock in a company or a savings account passbook, the first assignee who receives delivery of the tangible token prevails over subsequent assignees.

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delegation of duties

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a transfer of contractual duties by an obligor to another party for performance.

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delegator

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an obligor who transfers his or her duty

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delegatee

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the party to whom the duty is passed to by the delegator

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duites that cannot be delegated

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personal service contracts calling for professional skills, contracts whose performance would materially vary if delegated.

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liability of the delegatee

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determined by the following rules: Assumption of duties and declaration of duties.

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assumption of duties

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a situation in which a delegation of duties contains the term "Assumption" or other similar language. in such a case the delegatee is legally liable to the obligee for nonperformance.

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Declaration of Duites

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there is a valid delegation of duties but the delegatee has not assumed the duities under a contract. The delegatee is not liable for nonperformance.

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anti delegation clause

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clause indicating that the duties cannot be delegated. These clauses are ignored for impersonal duties such as paying money.

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third party beneficiaries

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third party that claims rights under others' contracts. They are either intended or incidental beneficiaries.

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Intended beneficiary

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when parties enter into a contract they can agree that the performance of one of the parties should be rendered to or directly benefit a third party. The third party can enforce the contract against the party who promised to render performance.

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to types of intended beneficiaries

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donee beneficiary and creditor beneficiary

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donee beneficiary contract

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a contract entered into with the intent to bestow a benefit or gift on an intended third party

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promisee

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the contracting party who directs that the benefit be granted to another

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promisor

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the party who agrees to grant performance for the benefit of the third party.

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Donee beneficiary

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party that receives the benefit. this party can enforce the contract against the promisor.

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creditor beneficiary contract

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a contract that arises when: a debtor borrows money from a creditor to purchase some item; the debtor signs the agreement to pay the creditor the amount of the loan plus interest; the debtor sells the item to another party before the loan is paid; the new buyer promises the original debtor that he or she will pay the remainder of the loan amount to the original creditor. The creditor is the beneficiary

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creditor beneficiary

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this party can go after the original debtor or the new debtor for nonperformance.

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incidental beneficiary

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A party who is unintentionally benefited by other people's contracts. This party has no rights to enforce or sue under other peoples contracts.

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covenant

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an unconditional promise to perform. either party can sue for nonperformance.

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conditions

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a qualification of a promise that becomes a covenant if it is met. there are three types: Conditions precedent, conditions subsequent, and concurrent conditions.

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condition precedent

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a contract that requires the occurrence or nonoccurrence of an event BEFORE a party is obligated to perform a contractual duty.

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