Prepare to master a crucial area of contract law with our deep dive into Third Parties! In this episode of Study for the Bar in Your Car, we unpack how individuals not initially part of a contract can gain rights, take on duties, or otherwise get involved, drawing directly from Angela's fantastic law school notes.
You'll gain clarity on:
- Third Party Beneficiaries: Discover when someone is an intended beneficiary with legal standing versus an incidental beneficiary who has no rights. Learn the critical difference between done beneficiaries (gift, generally no recourse against the promisee) and creditor beneficiaries (satisfies a debt, can sue the promisee on the original obligation). We'll also explain the vital concept of vesting of rights, the point where a third party's rights become protected from modification by the original parties.
- Assignment of Rights: Understand how contractual benefits (like the right to payment) can be transferred to a third party. We'll clarify the limits on assignability and the crucial distinction between gratuitous assignments (often revocable) and assignments for consideration (generally irrevocable). A key takeaway is that the assignee steps into the assignor's shoes, taking the right subject to defenses the obligor had against the assignor before notice of the assignment was given.
- Delegation of Duties: Explore how contractual obligations to perform can be transferred. Crucially, you'll learn why the original obligor (delegator) generally remains liable for performance even after delegating the duty. The only way to achieve full release from liability is through novation, a three-way agreement where all parties, including the obligee, explicitly consent to substitute a new party and release the original one.
This episode provides the essential framework for tackling complex bar exam questions. We highlight how to focus on intent for beneficiaries, understand the nuances of assignability and delegability, and always track who had notice of what and when in these tricky scenarios.
Don't miss this in-depth, practical guide to third parties in contract law. Tune in, subscribe, and supercharge your bar prep!
