Exam 16: Third Parties to Contracts

Mary goes to a stockbroker, purchases 50 shares of a certain stock, and instructs the broker to register the stock in her husband Warren's name. If this stock is intended as a Valentine's Day gift, Warren becomes a(n):

When the assignee gives consideration in exchange for an assignment, there is a contract between the assignor and the assignee that prevents the assignor from revoking the assignment without the assent of the assignee.

Notice of an assignment:

Lauren received a $1,500 scholarship to attend the local community college. She decides not to attend college that year, so she can assign her right to the scholarship to her friend, Sean.

A valid assignment requires that notice be given to the obligor.

A creditor beneficiary is a type of incidental beneficiary.

Contractual duties are assignable.

A gratuitous assignment is generally valid and enforceable.

The delegation of a duty still leaves the delegator responsible for the performance of the duty.

As a general rule, partial assignments of contract rights are not enforceable.

The UCC imposes a writing requirement on all assignments of $500 or more.

Rick has a contract with a home repair company to paint his house and landscape his yard. When he realizes that he will have some unexpected medical expenses, he calls the home Repair Company to cancel the contract. Rick's next door neighbor can sue Rick to enforce the contract, because if Rick improves his own property, his neighbor's property will also be worth more money.

Pedro has a contract to build a garage. He delegates the wiring job to a local electrician who improperly performs it. Pedro is responsible, even though he delegated the duty.

Bill wants to buy a new car. He goes to the bank to get a loan for the purchase, and signs an agreement to pay $10.00 per month in premiums on a term life insurance policy which names the bank as the recipient of the policy proceeds in the event of his death before the loan is repaid. The bank is a(n):

In an assignment or delegation, the third parties' rights or duties arise after the contract is made.

A contract in which a party (the promisor) promises to render a certain performance not to the other party (the promisee) but to a third person (the beneficiary) is called a third party beneficiary contract.

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):

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:

A(n)

The UCC permits a buyer under a contract of sale to agree as part of the contract that he will not assert against an assignee any claim or defense that the buyer may have against the seller under certain circumstances. Identify these circumstances, and discuss the reason the UCC permits such a provision and how the FTC deals with such waiver of defense provisions.