Third Party Rights - Mercantile or Business Law - Lecture Slides, Slides of Commercial Law

Download Third Party Rights - Mercantile or Business Law - Lecture Slides and more Slides Commercial Law in PDF only on Docsity! Business Law Chapter 15 Third Party Rights Docsity.com Objectives • State what a contract assignment is • Define a contract delegation • Identify noncontracting parties who have rights in a contract • Explain when a third party beneficiary’s rights in a contract vest Docsity.com Assignment • Most common assignment – the right to the payment of money • Retailers usually sell their rights to receive payment at a discount because of the risk of noncollection from some debtors. Docsity.com Rights That Cannot be Assigned • If a statute expressly prohibits assignment • When a contract is personal in nature, the rights cannot be assigned unless all that remains is the money payment • If assignment will materially increase or alter the risk or duties of the obligor Docsity.com Rights That Cannot be Assigned • If a contract stipulates that the rights cannot be assigned • Exceptions – Cannot prevent the assignment of money – Assignment of rights in real estate • Restraints against alienation – Assignments of negotiable instruments – Sale of goods – damages for breach or payment of account owed Docsity.com Duties That Cannot be Delegated • When performance depends on the personal skill or talents of the obligor • When special trust has been placed in the obligor Docsity.com Duties That Cannot be Delegated • When performance by a third party will vary materially • When the contract expressly prohibits delegation Docsity.com Delegation • Obligee must accept performance from delegatee, unless the duty is one that can’t be delegated • Delegator liable to obligee if delegatee doesn’t perform • Delegatee is also liable because of “assumption of duty” Docsity.com Intended Beneficiaries • One who can sue the promisor directly for breach of a contract made for the beneficiary’s benefit • Life insurance policy • Cannot be enforced until the rights of the third party have vested Docsity.com Vested Rights • Rights have taken effect and cannot be taken away • When the third party demonstrates manifest assent to the contract, or • When the third party materially alters his position in detrimental reliance • Contract may reserve the right to cancel, rescind, or modify Docsity.com Incidental Beneficiaries • Unintentional benefit • Cannot enforce a contract to which he is not a party • Reasonable person test - To determine whether intended or incidental beneficiary Docsity.com