Exam 16: Third Parties to Contracts

Marlene owes Bailey $750 due June 1.Bailey assigns the debt to Greg on May 1, but neither Bailey nor Greg informs Marlene.On June 1, Marlene pays Bailey.Marlene must still pay Greg if Bailey does not turn over the money to Greg.

Will 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):

When contract terms prohibiting the assignment of rights exist, most courts will:

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

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

Third party rights in contracts can arise by assignment of rights, delegation of duties, or in third party beneficiary contracts.

Consideration must be received for an assignment to be effective.

A delegation still leaves the one who delegated the duty responsible for performance of the duty.

Harold hired Blake Painters to paint his house.Blake decides he has too many jobs and delegates the duties to the Andrews Company.Andrews does a poor job, and drips paint on Harold's flowers and windows.Harold:

Kellie owes a duty to Grant.Kellie delegates the duty to Hank.Hank:

Wendell owes Liz $75,000.Liz signs a written statement granting Troy a gratuitous assignment of her rights from Wendell.If Liz dies prior to delivering the statement to Troy:

Unless otherwise provided by statute, an assignment may be made orally.

A gratuitous assignment is revocable by the assignor.

A gratuitous assignment is revocable even after the assignor has made an effective delivery of the assignment to the assignee.

Discuss the revocability of assignments.

Darrell owns a parcel of land that is encumbered by a mortgage held by the First National Bank.Darrell agrees to sell the land to Paul for $50,000.Darrell and Paul together go to the First National Bank to discuss the sale and purchase with the banker.Darrell, Paul, and the banker sign an agreement stating that Paul will assume the mortgage and that Darrell will be discharged from all further liability on the mortgage.In this case:

In England and in a minority of states, the first of two or more assignees to give notice to the obligor is entitled to the assigned performance.

List the implied warranties imposed by law on an assignor who has received value with respect to the assignee and the assigned right.

Discuss defenses available to the promisor in an action by an intended third-party beneficiary to enforce the promise.

In general, an assignment includes an implied warranty that the assignor who receives value will do nothing to defeat or impair the assignment once it is delivered.