Assignments and Delegations

1
Assignments and Delegations

• Transfer of contractual rights is an Assignment.
• Transfer of contractual duties is a Delegation.
• A transfer of all rights and duties is generally
  known as an Assignment of All Rights

2
Assignments

• Transfer of rights in a bilateral contract to a
  third party.

3
Notice of Assignment

• Once a valid assignment of rights has been made,
  the assignee should notify the obligor of the
  assignment.
• The assignment is effective immediately, whether
  or not the assignee gives notice to the obligor.
• However, until the obligor receives notice of the
  assignment, he may satisfy his contractual
  obligations by performance to the assignor even
  if the assignor has already assigned her rights
  to the assignee.

4
You Can Always Assign Your Rights In

• the right to receive money,
• rights in, or the alienation of, real property,
• negotiable instruments, or
• the right to recover damages for breach of
  contract or for payment of an account under the
  UCC.

5
Delegations

• Contractual duties in a bilateral contract that
  are delegated to a third party.

New Contract?
6
Restrictions on Delegation

• As a general rule, all contract rights may be
  assigned, except where
• When special trust has been placed on the
  obligor.
• When performance requires personal skill or
  talents.
• When performance will vary materially from
  obligee expectations.
• When the contract expressly prohibits delegation.

7
Effect of a Delegation

• If the delegation is enforceable, the obligee
  must accept performance by the delegatee
• However, unless Obligee agrees to the delegation
  as a substitution of parties, the Delegator
  remains liable.

8
Third Party Beneficiaries

• Original parties (Privity Group) to the
  contract intend at the time of contracting that
  the contract performance directly benefits a
  third person.
• Intended Beneficiary A third party for whose
  benefit a contract is formed. (Has Rights in
  Contract)
• Incidental Beneficiary A third party who
  benefits from the performance of a contract, but
  whose benefit was not the reason the contract was
  formed. (Has no Rights in Contract)

9
Intended v. IncidentalBeneficiaries

• Intended
• Promisee intended to confer on the beneficiary
  the right to bring suit to enforce the contract.
• Factors
• Performance is rendered directly to 3rd party.
• 3rd partys right to control contract details.
• 3rd party expressly designated as beneficiary.

10
Types of Intended Beneficiaries

• Creditor Beneficiary A third party who benefits
  from a contract in which the promisor promises to
  pay a debt owed by the promisee to the
  third-party beneficiary. (Can Sue to Enforce
  Contract)
• Donee Beneficiary A third party for whose
  benefit a contract was made whereby the promisor
  promised the promisee to make a gift to the
  third-party beneficiary. (Cannot Sue )

11
Third Party Beneficiaries

• Party 1 contracts with Party 2 for benefit to
  Third Party Beneficiary

performance/ benefit given
12
The Vesting of an Intended Beneficiarys Rights

• For third party beneficiary contract to be
  effective, rights under the contract must vest
• Third partys manifesting assent to the contract.
• Third partys materially altering position in
  detrimental reliance on the contract.
• Condition of vesting (i.e. life insurance)

13
Assignments

• Transfer of rights in a bilateral contract to a
  third party.

14
Delegations

• Contractual duties in a bilateral contract that
  are delegated to a third party.

New Contract?
15
Third Party Beneficiaries

• Party 1 contracts with Party 2 for benefit to
  Third Party Beneficiary

performance/ benefit given
16
Introduction

• Most courts find E-Contracts involve basic
  principles of contract law, applied in the online
  context.

17
Online Acceptances

• Click-on Agreements.
• Shrink-Wrap Agreements.
• Contract terms are inside the box.
• Party opening box agrees to terms by keeping
  merchandise.

18
Conditions

• Types of Conditions
• Conditions Precedent.
• Conditions Subsequent.
• Conditions Concurrent.
• Express.
• TENDER Ready, Willing and Able to Immediately
  Perform

19
Discharge by Performance

• The contract comes to an end when both parties
  fulfill their respective duties by performing the
  acts they have promised.
• Types of Performance
• Complete Performance.
• Substantial Performance (minor breach).
• Complete vs. Substantial Performance whether the
  performance affords the other party substantially
  the same benefits as those promised.

20
Material Breach of Contract

• In a non-material breach, the duty to perform is
  not excused and the non-breaching party must
  resume performance of the contractual obligations
  undertaken.
• Materiality Important to the Financial
  Consequences (or consideration) of the contract
  To The Parties

21
Anticipatory Repudiation

• If before performance is due, one party refuses
  to perform his or her contractual obligation.
• Results in material breach.

22
Discharge by Operation of Law

• Alteration of The Contract.
• Statutes of Limitations.
• Bankruptcy.
• Impossibility or Impracticability. ?

23
Impossibility or Impracticability of Performance

• Objective Impossibility of Performance.
• Death or incapacitation prior to performance
• Destruction of the Subject Matter or
• Illegality in performance.
• Frustration of Purpose.
• Temporary Impossibility.

24
Satisfaction Contracts

• Subjective Satisfaction When the purpose of the
  performance is to satisfy personal taste,
  aesthetics, and the like (e.g., painting a
  portrait of a customers beloved), the court will
  ask whether the party to be satisfied was, in
  good faith, satisfied or dissatisfied with the
  performance.
• Objective Satisfaction When the purpose of the
  performance is to serve some function (e.g.,
  roofing a warehouse to keep out the elements),
  the court will ask whether a reasonable person
  would be satisfied or dissatisfied with the
  performance.

25
Introduction

• Most Common Remedies
• Damages.
• Rescission and Restitution.
• Specific Performance.
• Reformation.

26
Damages

• Compensatory Damagesdirect losses.
• Sale of Goods difference between contract and
  market price.
• Sale of Land specific performance.
• Construction Contracts varies.
• Consequential (Special) Damagesforeseeable
  losses.
• Breaching party is aware or should be aware,
  cause the injury party additional loss.
• Case 18.1 Hadley v. Baxendale (1854).

27
Damages

• Punitive Damagespunish or deter future conduct.
• Generally not available for mere breach of
  contract.
• Usually tort (e.g., fraud) is also involved.
• Nominal Damagesno financial loss.
• Defendant is liable but only a technical injury.
  When Compensatory damages are uncertian.

28
Mitigation of Damages

• When breach of contract occurs, the innocent
  injured party is held to a duty to reduce the
  damages that he or she suffered.
• Duty owed depends on the nature of the contract.
• Case 18.2 Hanson v. Boeder (2007)

29
Liquidated Damages Provisions

• Liquidated Damages
• A contract provides a specific amount to be paid
  as damages in the event of future default or
  breach of contract.
• Late Fees Termination Fees etc.

30
Law of Liquidated Damages

• Watson v Harrison, 324 Mich 16 (1949), The law
  will not permit parties, by express stipulations,
  or any form of language, however clear the
  intent, to set it aside.
• In order to respect the agreement of the parties
  as to the amount of damages, the court must find
• the actual damages for a breach are uncertain in
  their nature AND
• the contractual provision is not in the nature
  of a penalty.

31
Rescission and Restitution

• Rescission.
• A remedy whereby a contract is canceled and the
  parties are restored to the original positions
  that they occupied prior to the transactions.
• Restitution.
• Both parties must return goods, property, or
  money previously conveyed.
• Note Rescission does not always call for
  restitution. Restitution is called for in some
  cases not involving rescission.

32
Specific Performance

• Equitable remedy calling for the performance of
  the act promised in the contract.
• Remedy in cases where the consideration is
• Unique (sale of land)
• Scarce or
• Not available remedy in contracts for personal
  services.

33
Reformation

• Equitable remedy allowing a contract to be
  reformed, or rewritten to reflect the parties
  true intentions.
• Available when an agreement is imperfectly
  expressed in writing.

34
Recovery Based on Unjust Enrichment

• Equitable theory imposed by courts to obtain
  justice and prevent unjust enrichment.
• Unjust Enrichment is a contract implied in law.
• Fictional contracts created by courts.
• Imposed on parties for the interest of fairness
  and justice. So its an Equitable Remedy subject
  to Chapter 2 maxims.
• Def. knowingly received something of value.
• While not entitled to the benefit (by K or
  otherwise)
• Under circumstances which would make it unjust to
  permit the retention of the benefit.

35
Promissory Estoppel

• Equitable Right, therefore remember Maxims as
  defenses.
• Promissory Estoppel
• Must be definite promise.
• Promisee must justifiably rely on the promise.
• Justifiable if Promisor knew or should have known
  about reliance
• Actual reliance necessary, not merely hope.
• Reliance is substantial.
• Justice will be served by enforcing promise.

36
Election of Remedies

• Doctrine created to prevent double recovery.
• Nonbreaching party must choose which remedy to
  pursue.
• UCC rejects election of remedies.
• Cumulative in nature and include all the
  available remedies for breach of contract.

37
Waiver of Breach

• A pattern of conduct that waives a number of
  successive breaches will operate as a continued
  waiver.
• Nonbreaching party can still recover damages, but
  contract is not terminated.
• Nonbreaching party should give notice to the
  breaching party that full performance will be
  required in the future.