Third Party Rights
1. Assignments
2. Delegations
3. Third party beneficiaries
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Wayne attends Metro Community College in Riverside.
To pay tuition, buy books, and meet other expenses,
Wayne obtains a loan from the First National Bank of
Riverside. Six months later, Wayne receives a letter from the bank, which states that it has transferred its rights to receive Wayne’s payments on the loan to the
Educational Loan Collection Agency (ELCA). The letter tells Wayne that when he begins making payments, he should make them directly to the ELCA.
What is this transfer? Should Wayne pay the bank or the agency?
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A contract is a private agreement between the parties who have entered into it, so these parties alone should have rights and liabilities under the contract. This is referred to as privity of contract 合同关系不涉及第三
人原则；合同仅在当事人间有效 .
Exceptions: Assignment of rights and delegation of duties; a third party beneficiary contract
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Transfer of contractual rights by a party to a contract to a third person.
Obligor 债务人 : The party who owes the duty of performance.
Obligee 债权人 : The party owed a right under the contract.
Assignor 让与人 : Contract party who assigns the contractual rights.
Assignee 受让人 : Third person to whom contract rights are assigned.
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The transfer is an assignment . The agency may have purchased the right to receive
Wayne’s payments. The agency can insist that Wayne make his payments directly to the agency.
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1.Personal Service Contracts
2.Assignment of future rights
3.Contracts Where Assignment Would
Materially Alter the Risk
4.Assignment of Legal Actions
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1.Duty to notify . Assignee must notify the obligor that (1) the assignment has been made and (2) performance must be rendered to the assignee.
2.Failure to give notice.
If the assignee fails to give proper notice to the obligor and the obligor renders performance to the assignor, the assignee’s only course of action to recover is from the assignor.
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Pryor owes Tomas $1,000 on a contractual obligation. Tomas assigns this monetary claim to Maria. No notice of assignment is given to Pryor. Pryor pays Tomas the
$1,000. Was the assignment valid? Did
Pryor’s payment discharge the debt, or does
Pryor also have to pay Maria?
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Transfer of contractual duties by a party to a contract to a third person.
Delegator 转托人 : Party who transfers his or her contractual duties.
Delegatee 被转托人 : Third person to whom contractual duties are delegated.
A delegation is the transfer of duties under a contract to a third party whereby the delegatee (the third party) assumes the obligation of performing the contractual duties previously held by the delegator .
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Leo contracts to build Donna a house according to Donna’s blueprint. Leo becomes seriously ill and contract to have Hal build the house for Donna (the obligee). Hal fails to build the house. Can Donna sue Leo? Can Donna sue Hal?
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Third party beneficiary is one who is not a party to a contract but for whose benefit a promise is made in the contract.
Third party beneficiary contract 第三方当事
人为受益人的合同 is one made for the purpose of benefiting a third party.
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有意的受益人
A third party for whose benefit a contract is created. When the promisor (the one making the contractual promise that benefits a third party) fails to perform as promised, the third party can sue the promisor directly.
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Hilton Hotels, Inc, obtains a loan from City bank to refurbish a hotel in Atlanta, Georgia.
The parties sign a promissory note requiring the loan to be paid off in equal monthly installments over the next 10 years. Before the loan is paid, Hilton sells the hotel to ABC
Hotels another chain of hotels. ABC Hotels agrees with Hilton to complete the payments due on the City Bank loan. What can the bank do if ABC Hotels fails to pay?
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偶然的受益人
A third party who indirectly (incidentally) benefits from a contract but for whose benefit the contract was not specifically intended. They have no rights to the benefits received and cannot sue the promisor to have them enforced.
Note: Only intended beneficiaries acquire legal rights in a contract
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Jules contract with Vivian to build a cottage on Vivian’s land. Jules’s plans specify that
Super Insulation Company’s insulation materials must be used when constructing the house.
Can Super Insulation enforce the contract against Jules by requiring that Jules buy its insulation materials?
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Bain v. Gillispie
Court of Appeals of Iowa
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1.James C. Bain, a college basketball referee, had a contract with the Big 10 Basketball
Conference( Big 10) to referee various basketball games. On
March 6, 1982, Bain called a foul on a University of Iowa player that permitted free throws by a Purdue
University player. That player scored the point that gave Purdue a last-minute victory and eliminated
Iowa from the Big 10 championship.
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2.Some Iowa fans including John and Karen Gillispies, asserted that the foul call was clearly in error.
The Gillispies operated a novelty store in Iowa City that sold
University of Iowa sports memorabilia 纪念品 . They filed a complaint against Bain, alleging that his negligent refereeing constituted a breach of his contract with the Big 10 and destroyed a potential market for their products. The Gillispies sought $175,000 compensatory damages plus punitive damages.
The trial court granted
Bain’s motion for summary judgment.
The Gillispies appealed.
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Were the Gillispies intended beneficiaries of the contract between Bain and the Big 10
Basketball Conference?
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Court’s Reasoning: The Gillispies claimed that they were direct donee beneficiaries 第三当事人合同中的合同受
益人 . The real test is whether the contracting parties intended that a third person should receive a benefit that might be enforced in the courts.
The court stated, “The Gillispies can be considered nothing more than incidental beneficiaries and as such are unable to maintain a cause of action 诉讼理由 .”
DECISION
The appellate court held that the Gillispies were merely incidental beneficiaries of the contract between Bain and the Big 10 Basketball
Conference. Therefore, they could not maintain their lawsuit for an alleged breach of that contract. Affirmed.
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