Third Party Rights

1
Chapter 12

• Third Party Rights
• Discharge

2
Third Party

• 3rd party someone not a party to original
  agreement
• (Did not sign the agreement)
• 3rd parties can be involved
• At contract formation
• After contract formation

3
Third Party Involvement after formation

• Contract is a set of rights and duties
• Party can transfer any of these to another
• Delegate Duties (have another perform for you)
• Assign Rights (transfer your rights to another)

4
Assignment Delegation

• Can occur separately or together
• Can assign or delegate some or all
• Delegatee of duty must accept
• Delegator of duty remains responsible
• Limits on delegation
• Obligor/Obligee?

5
Limits on delegation

• Special Skills
• Special Trust
• Recipient of performance will be getting
  something different
• Contract can prohibit

6
3rd Party Beneficiaries

• Present when contract is formed
• Contract calls for another to be benefitted
• Any intended beneficiary can sue under contract
• Creditor
• Donee (gift recipient)
• Incidental Beneficiaries cannot

7
Discharge of Duties

• Means party has done all that is needed under the
  contract
• Most often by doing what contract requires
  performance
• But many other circumstances

8
Discharge by agreement of the parties

• Mutual Rescission
• Both agree to call off the deal
• Novation
• Replace one party
• Substituted contract
• well do this instead
• The new contract immediately discharges duties of
  1st contract

9
Discharge by agreement of the parties

• Accord and Satisfaction
• New agreement to replace old
• Key in settlement of dispute over old agreement
• Discharge of duties in old contract does not
  occur until new agreement is performed
• If accord not performed, can sue on either orig
  or accord

10
Discharge--Impossibility

• Death of promissor of personal service contract
• Destruction of subject matter
• Supervening Illegality
• Death of promissee?
• Sometimes

11
Subjective Impossibility

• Must be due to unforeseeable circumstances
• Commercial Impracticability
• Makes it so contract is extremely burdensome to
  perform
• Price change usually not enough
• Frustration of Purpose
• No harder to perform, but no longer makes sense
• Know how to distinguish these two