Bài giảng Business Law - Chapter 17: Rights of Third Parties

Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin3Introduction to ContractsThe Agreement: OfferThe Agreement: AcceptanceConsiderationReality of ConsentContractsPART3Capacity to ContractIllegalityWritingRights of Third PartiesPerformance and RemediesContractsPARTRights of Third PartiesPAETRHC17The best minute I spend is the one I invest in people.Kenneth Blanchard, The One Minute Manager (1993)Learning ObjectivesExplain the concept and consequences of assignmentExplain the concept and consequences of delegationDiscuss the concept of the third party beneficiary and identify the three kinds of beneficiariesSometimes a person who entered into a contract must transfer the contract rights or duties to another person (third party)Examples: sublease of your apartment, asking another person take over work you agreed to do, or doing something to benefit a third personKey to successful transfer: understand the third party’s abilities, limitations, and needsOverview A person who owes a duty to perform under a contract is called an obligorThe person to whom the duty is owed is called the obligeeOverview Transfer of a right under a contract is called an assignmentExample: Jane arranges for her employer to transfer her next paycheck to her parents’ bank accountEmployer is the obligor (owes Jane money)Jane is the obligee and assignorJane’s parents are the assignees Assignment of ContractsAssignments may be made in any way sufficient to show assignor’s intent to assignA writing is not necessaryUnless statute of frauds appliesAssignee does not need to give consideration to assignor in exchange for the assignmentDetails of AssignmentAssignment will not be effective if it:Is contrary to public policyViolates a non-assignment clause in a contractAdversely affects obligor in significant wayAssignment may be ineffective if the contract right involved a personal relationship or element of personal skill or character Limitations on AssignmentAppointment of another person to perform a duty under a contract is called a delegationExample: Mike mows Janet’s lawn weekly. Mike becomes ill and arranges for Sonny to mow Janet’s lawnJanet is the obligeeMike is the obligor and delegatorSonny is the delegateeDelegation of DutiesCaution: an assignment extinguishes the assignor’s right and transfers it to the assignee, but the delegation of a duty does not extinguish the duty owed by delegatorDelegator remains liable to the obligee unless the obligee agrees to make a new contract substituting the delegatee’s for the delegator Delegation of DutiesDelegation ProcessIn an effective delegation, performance by the delegatee will discharge the delegatorWhy you should understand delegatee’s abilities and limitationsEffective DelegationDuties are not delegable if the delegation:Is contrary to public policyIs prohibited by a contract clauseAlso, duties that are dependent on the individual traits, skill, or judgment of the person who owes the duty to perform may not be delegableExample: hip hop artist could not reasonably delegate concert obligation to opera starNon-delegable DutiesDelegation may be made in any way that shows the delegator’s intent to delegateDelegator may be discharged from performance by a substituted contract (novation) in which obligee agrees to discharge original obligor and substitute a new obligorEffect: Original obligor has no further obligationDetails of DelegationIf parties to a contract intended to benefit a third party, courts give effect to their intent permitting third party to enforce the contractReferred to as third-party beneficiaryExample: Father contracts and pays for Homes, Inc. to build house as gift for SonSon (third-party beneficiary) may sue Homes, Inc. if the company breaches the contractFather may also sue Homes, Inc.Third-Party BeneficiariesIncidental beneficiary is one obtaining a benefit as unintended by-product of a contractNo rights under contractIn foregoing example, Son’s Wife would be an incidental beneficiaryIncidental BeneficiariesThought QuestionIf public policy favors freedom of contract, then should courts enforce non-assignment and non-competition clauses? What about agreements to arbitrate for donee beneficiaries?