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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 Mann CH 16- 1 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 Mann CH 16- 2 • 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 Mann CH 16- 3 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 Mann CH 16- 4