Exam 16: Third Party Rights

Lois takes out a life insurance policy with Mega Insurance Corporation that names her son, Nero, as the bene?ficiary. This is

An incidental beneficiary can sue directly to enforce a promisee's promise.

Oral assignments are prohibited.

A creditor beneficiary can sue directly to enforce a promisor's promise.

A right to receive damages on a breach of a contract for a sale of goods may be assigned.

Joy and Kris enter into a contract for Kris to lay sod in Joy's yard for which she agrees to pay Kris. When Kris's schedule conflicts, she contacts Leza, to whom Kris "assigns all rights under the contract." Kris is

Evergreen Landscapers, Inc., owes Friendly Finance Company $5,000. Evergreen enters into a contract with Suburban Office Park under which Evergreen promises to maintain the landscaping on Suburban's property. Under the contract, Suburban promises to pay Friendly Finance the amount that will be due Evergreen until Evergreen's debt to Friendly Finance is paid. Evergreen performs as promised, but Suburban does not pay Friendly Finance. Can Friendly Finance succeed in a suit against Suburban? Why or why not?

Notice is not legally required to establish the validity of an assignment.

A third party beneficiary contract is formed only when the parties to a contract intend to con?fer a benefit on a third party.

Nick and Roberta contract for the sale of computer equipment, reserving the right to al?ter a particular provision in the contract. The rights of any third party beneficiary of that contract are

A "donee" beneficiary is always an "incidental" beneficiary.

The rights of a third party bene?ficiary under a contract are subject to any express reservation of rights in the contract to the original parties.

Fact Pattern 16-A1 Business Properties, Inc. , contracts with Corporate Builders, Inc., to construct an office building. BPI agrees to obtain insurance to cover the project, after which the parties waive their rights against the subcontractors. BPI ob?tains the policy from Debit Insurance Company. When the new building is destroyed in a storm, Debit pays BPI and files a suit against the subcontractors. -Refer to Fact Pattern 16-A1. Under the reasoning of the court in Case 16.2, Midwestern Indemnity Co. v. Systems Builders, Inc., in relation to the waiver in BPI's contract with Corporate Builders, the subcontractors are

Dina and Elle agree that Elle can satisfy a preexisting debt owed to Dina by pay?ing the money directly to Fava. The designation of this con?tract as a third party benefi?ciary contract is determined by the intent to benefit

An assignment of an insurance policy cannot be prohibited.

Reba and Sly enter into a contract by which Reba promises to deliver newly printed marketing brochures to Sly. Reba later transfers her duty under the contract to Troy. Reba is

Musical Production Company and Nora enter into a contract for Nora to write six songs for which Musical agrees to pay her. Nora transfers her right to payment under the contract to Omni Entertainment Agency. Nora is

Fact Pattern 16-A1 Business Properties, Inc. , contracts with Corporate Builders, Inc., to construct an office building. BPI agrees to obtain insurance to cover the project, after which the parties waive their rights against the subcontractors. BPI ob?tains the policy from Debit Insurance Company. When the new building is destroyed in a storm, Debit pays BPI and files a suit against the subcontractors. -Refer to Fact Pattern 16-A1. Enterprise Corporation is the owner of an adjacent building, the value of which increased when BPI's new of?fices were built. Debit files a suit against Enterprise, claiming that Enterprise's neg?ligence con?tributed to the collapse of BPI's new building. Under the rea?soning of the court in Case 16.2, Midwestern Indemnity Co. v. Systems Builders, Inc., in relation to the waiver in BPI's contract with Corporate Builders, Enterprise would be

An incidental beneficiary is not entitled to enforce the promise of a promisor.

If a contract does not require that performance be rendered directly to a third party, the third party may be considered an incidental beneficiary.