University of Georgia                                                        Terry College of Business

                     LS 470 - Business Law I

                     Dr. B-A's Word Outlines



                                CONTRACT RIGHTS OF THIRD PARTIES

I.  Third Party Beneficiary Contracts
     K entered into expressly for bene of 3d pty 
        3d pty is not a contracting pty
     obligor-performs terms of the K
     beneficiary (donee or creditor) - recs benefits of K
     donor or creditor - enters into K for beneficiary
     beneficiary must show s/he is an intended 
     incidental beneficiaries may not sue either pty
     donee need not be named in K if can show mbshp in group  it
       was for
     beneficiary need not know of K at time made
     beneficiary has vested int in K from moment its made
     gen K can't be rescinded w/o bene's consent if s/he's
       accepted its terms
     until bene accepts or acts upon K 
          K can be abrogated 
          bene can be divested
          minors presumed to accept favorable K upon executn 
          K can't be changed to deprive minor of its benefits
     1.  creditor beneficiary (CB) K
          originally a debt betw debtor and CB
          to pay debt, debtor (D) tells ob'or to pay CB instead
          obligor now to pay CB
          CB can sue either o'or or D if K not perfd
     2.  donee beneficiary (DB) K
          donor Ks with ob'or to provide gift to DB
          tho K is between ob'or and donor, its for DB's bene
          DB can only sue ob'or if K not perfd 
II.  Assignment
      pty to K transfers K rts to 3d pty
      assignment-transfer of rights
      delegation-transfer of duties
       gen, assmt is of rts, but may contain both
      assignor - assigns rts to 3d pty
      assignee - person K rts assigned to 
      obligor - orig pty to K who must now perform for a'ee
        rather than a'or
      if a'or gives full assmt, still liab on K if obl'ee fails
          if novation rec'd, a'or no longer liab on K
      a'ee steps into a'or's shoes & has no greater rts  
      ob'or can use any defenses good agnst a'or, agnst a'ee
      a'ee shd immed notify ob'or of assmt
        protects ob'or fr having to perf twice if perf given to 
         a'or bec no notice
        protects a'ee if a'or assigns same rt to another a'ee
     ob'or must perf for a'ee
     perf by ob'or for a'or doesn't disch K
     no formalities req'd to give assmt
     consid not reqd tho may be given
     may be written or oral - subj to Stat of Frauds
     after assmt, a'ee can sue ob'or to enforce rts under K
     gen, K rts may be assigned w/o consent of ob'or
        not so for pers rts/duties K
        not so if assmt places add'l burden or risk on ob'or
     UCC gen permits assmt
        if anti-assmt cl, K can still be assigned
        non br pty has c/a for br of K
        gen such cl only prohibs delegatn
        if K said K void if assigned, it is
        if K said assmt invalidates K, ct may permit K avoidance