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Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Click your mouse
anywhere on the
screen when you are
ready to advance the
text within each slide.
After the starburst appears behind the blue
triangles, the slide is completely shown.
You may click one of the blue triangles to
move to the next slide or the previous slide.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
15
“For kindness begets kindness
evermore, but he from whose
mind fades the memory of
benefits, noble is he no more.”
Sophocles,
Greek playwright
15
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Someone who was not a party to the
contract but stands to benefit from it.
 An intended beneficiary may enforce a
contract if the parties intended her to
benefit and if either:
• enforcing the promise will satisfy a duty of
the promisee to the beneficiary; or
• the promisee intended to make a gift to the
beneficiary.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
15
 Any beneficiary who is not an intended
beneficiary is an incidental beneficiary,
and may not enforce the contract.
 Creditor beneficiaries and donee
beneficiaries may enforce the contract.
• If the promisee is fulfilling some duty, the
third party beneficiary is called a creditor
beneficiary.
• If the promisee is making a gift, the third
party is a donee beneficiary.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
15
 A contracting party may transfer his
rights under the contract, which is
called an assignment of rights.
 A contracting party may transfer her
duties pursuant to the contract, which is
a delegation of duties.
 The assignor is the one making an
assignment and the assignee is the one
receiving an assignment.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
15
 Any contractual right may be assigned
unless assignment:
• (a) would substantially change the obligor’s
rights or duties under the contract; or
• (b) is forbidden by law or public policy; or
• (c) is validly precluded by the contract itself.
 Assignment is also prohibited when the
obligor is agreeing to perform personal
services.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
15


Writing – required only if governed by statute
of frauds.
Consideration
• An assignment for consideration is irrevocable.
• A gratuitous assignment is made as a gift for no
consideration.
• A gratuitous assignment is generally revocable if it is
oral and generally irrevocable if it is written.

Notice to the Obligor – not required for
assignment to be valid, but usually necessary
so that the obligor may know what is expected.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
15
 Once the assignment is made and the
obligor notified, the assignee may
enforce her contractual rights against
the obligor.
 The obligor may generally raise all
defenses against the assignee that she
could have raised against the assignor.
15
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Difference under the UCC
• In general, the obligor on a sales contract
may assert any defenses against the
assignee that arise from the contract, and
that arose before notice of assignment.
• An agreement by a buyer that he will not
assert against an assignee any claim or
defense that he may have against the seller
is generally enforceable if he took the
assignment in good faith, for value, without
notice of the potential defenses.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
15
 Most duties are delegable. But
delegation does not by itself relieve the
delegator of his own responsibility to
perform the contract.
 An obligor may delegate unless
• (1) delegation would violate public policy, or
• (2) the contract prohibits delegation, or
• (3) the obligee has a substantial interest in
personal performance by the obligor.
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
15
 A novation is a three-way agreement in
which the obligor delegates all duties to
the delegatee and the obligee agrees to
look only to the delegatee for
performance.
 The obligee releases the obligor from
all liability.
15
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
15
Essentials of Business Law -- 4th Edition
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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