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Law 206   Ch. 9 - Third Party Contracts
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Law 206 Ch. 9 - Third Party Contracts



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  • 1. Chapter 9 THIRD PARTY CONTRACTSIn this chapter you will: List the different types of third party contracts Discuss third party creditor beneficiary contracts Discuss third party donee beneficiary contracts Distinguish between an intended and an incidental beneficiary Define a contractual assignment Discuss the effect of an assignment on the original contracting parties Indicate how a gratuitous assignment may become irrevocable Differentiate between an assignment and a novation Distinguish a delegation from an assignment Explain the effect of the UCC on third party contracts
  • 2. Third Party BeneficiaryContracts Agreements in which the original intent of one of the contracting parties, when entering into the contractual agreement, is to have the promised-for consideration pass not to her, but to some outside person
  • 3. Two Types of Third PartyBeneficiary Contracts Third party creditor beneficiary contract: the purpose is to extinguish a debt or obligation owed to some third party Third party donee beneficiary contract: the purpose is to confer a gift on a third person
  • 4. Third Party Beneficiary ContractsCreditor Beneficiary Donee BeneficiaryCreated to extinguish debt Created to confer giftRights vest with detrimental Rights vest on knowledgerelianceCan sue promisor or promisee Can sue promisor onlyPromisor/promisee can defend by Promisor can defend by assertingasserting any claim he has against any claim he has against promiseethe other contracting party
  • 5. Assignment An assignment is the transfer of a promisee’s rights under an existing contract  Assignments come into existence after the original contract is created  A promisee may not assign his rights without the consent, express or implied, of the promisor