Bài giảng Business Law (13th edition) - Chapter 17: Rights of Third Parties

ContractsIntroduction to ContractsThe Agreement: OfferThe Agreement: AcceptanceConsiderationReality of Consent3McGraw-Hill/Irwin Business Law, 13/e© 2007 The McGraw-Hill Companies, Inc. All rights reserved.ContractsCapacity to ContractIllegalityWritingRights of Third PartiesPerformance & Remedies3McGraw-Hill/Irwin Business Law, 13/e© 2007 The McGraw-Hill Companies, Inc. All rights reserved.Rights of Third PartiesPAETRHC17“The best minute I spend is the one I invest in people.” Kenneth Blanchard, The One Minute Manager (1993)Learning ObjectivesAssignment of ContractsDelegation of DutiesThird-Party Beneficiaries17 - *Sometimes a person who entered into a contract must transfer contract rights or duties to another person (third party)Transfer of a right under a contract is called an assignmentAppointment of another person to perform a duty under a contract is called a delegationOverview 17 - *Assignment will not be effective if it:Is contrary to public policyViolates a non-assignment clause in a contractSee Managed Health Care Associates v. KethanAdversely affects obligor in significant wayInvolved a personal relationship or element of personal skill or character Limitations on Assignment17 - *Assignment extinguishes assignor’s right and transfers it to assignee, but delegation of a duty does not extinguish the duty owed by delegator to obligeeDelegator remains liable to the obligee unless obligee agrees to substitute new party for delegator by novationIn an effective delegation, performance by the delegatee will discharge the delegatorLimitations on Delegation17 - *Duties not delegable if delegation: Is contrary to public policyViolates non-assignment clause in contractAdversely affects obligee in significant wayInvolved a personal relationship or element of personal skill or characterLimitations on Delegation17 - *If parties to a contract intended to benefit a third party, courts permit third party (third-party beneficiary) to enforce the contractReferred to as third-party beneficiarySee Locke v. Ozark City Board of Ed.Incidental beneficiary is one obtaining a benefit as unintended by-product of a contractNo rights under contractThird-Party Beneficiaries17 - *Test Your KnowledgeTrue=A, False = BA person who assigns a right is an obligeeAll duties may be delegatedNon-assignment clauses are enforceableIf a contract contains a non-assignment clause, the clause actually means that duties may not be delegated17 - *Test Your KnowledgeTrue=A, False = BSheila assigned her right to the proceeds of a prize to a charity. Sheila is an assignee and the charity is the assignor. Joshua contracted with Bigg Homes to build a two-story house that will improve the value of nearby homes. Joshua’s neighbor is an incidental beneficiary. 17 - *Test Your KnowledgeMultiple ChoiceJames financed car purchase with CarCo, then sold the car to Marsha. Marsha agreed to pay remaining amount of the car loan, but failed to make payments. CarCo may sue: (a) James only since he contracted with CarCo(b) James and Marsha since CarCo is a creditor beneficiary of the contract between James and Marsha(c) Marsha only since Marsha was substituted for James 17 - *Test Your KnowledgeMultiple ChoiceMack contracted with Dept. Store to play piano and holiday songs in the store during December. Contract had a “non-assignment” clause. Mack got another job and delegated his duties to Sarah. Does Dept. Store have a claim against Mack? (a) Yes. Mack breached the non-assignment clause by delegating his duties to Sarah(b) No. Mack found someone to replace him(c) No. Contract didn’t have non-delegation clause 17 - *Thought QuestionIf public policy favors freedom of contract, then should courts enforce non-assignment and non-competition clauses? 17 - *