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CHAPTER SUMMARY
Assignment of Rights
Definition of Assignment voluntary transfer to a third
party of the rights arising from a contract so that the
assignor’s right to performance is extinguished
• Assignor party making an assignment
• Assignee party to whom contract rights are assigned
• Obligor party owing a duty to the assignor under the
original contract
• Obligee party to whom a duty of performance is owed
under a contract
Requirements of an Assignment include intent but not
consideration
• Revocability of Assignment when the assignee gives
consideration the assignor may not revoke the
assignment without the assignee’s consent
• Partial Assignment transfer of a portion of contractual
rights to one or more assignees
Assignability most contract rights are assignable, except
• assignments that materially increase the duty, risk, or
burden upon the obligor
• assignments of personal rights
• assignments expressly forbidden by the contract
• assignments prohibited by law
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Rights of Assignee the assignee stands in the shoes of the
assignor
• Defenses of Obligor may be asserted against the
assignee
• Notice is not required but is advisable
Implied Warranty obligation imposed by law upon the
assignor of a contract right
Express Warranty explicitly made contractual promise
regarding contract rights transferred
Successive Assignments of the Same Right the majority
rule is that the first assignee in point of time prevails over
later assignees; minority rule is that the first assignee to
notify the obligor prevails
Delegation of Duties
Definition of Delegation transfer to a third party of a
contractual obligation
• Delegator party delegating his duty to a third party
• Delegatee third party to whom the delegator’s duty is
delegated
• Obligee party to whom a duty of performance is owed
by the delegator and delagatee
Delegability most contract duties may be delegated,
except
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• duties that are personal
• duties that are expressly nondelegable
• duties whose delegation is prohibited by statute or
public policy
Duties of the Parties
• Delegation delegator is still bound to perform original
obligation
• Novation contract, to which the obligee is a party,
substituting a new promisor for an existing promisor,
who is consequently no longer liable on the original
contract and is not liable as a delegator
Third-Party Beneficiary Contracts Definition a contract in which one party promises
to render a performance to a third person (the beneficiary)
Intended Beneficiaries third parties intended by the two
contracting parties to receive a benefit from their contract
• Donee Beneficiary a third party intended to receive a
benefit from the contract as a gift
• Creditor Beneficiary a third person intended to receive
a benefit from the agreement to satisfy a legal duty
owed to her
• Rights of Intended Beneficiary an intended donee
beneficiary may enforce the contract against the
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promisor; an intended creditor beneficiary may enforce
the contract against either or both the promisor and the
promisee
• Vesting of Rights if the beneficiary’s rights vest, the
promisor and promisee may not thereafter vary or
discharge these vested rights
• Defenses Against Beneficiary in an action by the
intended beneficiary of a third-party contract to enforce
the promise, the promisor may assert any defense that
would be available to her if the action had been brought
by the promisee
Incidental Beneficiary third party whom the two parties
to the contract have no intention of benefiting by their
contract and who acquires no rights under the contract
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