Acc 241 Business Law - Third Party Rights and Discharge Vocabulary
Accounting 241, BYU, Business Law, Third-party rights and discharge
Terms in this set (41)
Privity of Contract
The state of two specified parties being in a contract.
Assignment i.e Assignment of Rights
The transfer of contractual rights by an obligee to another party.
An obligee who transfers a right.
A party to whom a right has been transferred.
Anti Assignment Clause
A clause that prohibits the assignment of rights under the contract.
Delegation of Duties
A transfer of contractual duties by an obligor to another party for performance.
An obligor who has transferred his or her duty.
A party to whom a duty has been
Assumption of Duties
A situation in which a delegation of duties contains the term assumption, I assume the duties , or other similar language. In such a case, the delegatee is legally liable to the obligee for nonperformance.
A clause that prohibits the delegation of duties under the contract.
Intended third-party beneficiary
A third party who is not in privity of contract but who has rights under
the contract and can enforce the contract against the promisor.
Donee Beneficiary Contract
A contract entered into with the intent to confer a benefit or gift on an intended third party.
A third party on whom a benefit is to be conferred.
An original creditor who becomes a beneficiary under the debtor's new contract with another party.
A party who is unintentionally benefited by other people's contracts .
An unconditional promise to perform.
A qualification of a promise that becomes a covenant if it is met. There are three types of conditions: conditions precedent, conditions subsequent, and concurrent conditions.
A condition that requires the occurrence of an event before a party is obligated to perform a duty under a contract.
Personal Satisfaction Test
A subjective test that applies to contracts involving personal taste and comfort.
Reasonable Person Test
An objective test that applies to commercial contracts and contracts involving mechanical fitness.
A condition whose occurrence or nonoccurrence of a specific event automatically excuses the performance of an existing contractual duty to perform.
A condition that exists when the parties to a contract must render performance simultaneously; each party's absolute duty to perform is conditioned on the other party's absolute duty to perform.
A condition that can be implied from the circumstances surrounding a contract and the parties' conduct.
Novation Agreement i.e. Novation
An agreement that substitutes a new party for one of the original contracting parties and relieves the exiting party of liability on the contract. Also known as simply a novation.
Accord and Satisfaction
The settlement of a contract dispute.
Impossibility of Performance i.e. Objective Impossibility
Nonperformance that is excused if a contract becomes impossible to perform. It must be objective impossibility, not subjective.
Force Majeure Clause
A clause in a contract in which the parties specify certain events that will excuse nonperformance.
Nonperformance that is excused if an extreme or unexpected development or expense makes it impractical for the promisor to perform.
Creditor Beneficiary Contract
A contract that arises in the following situation; (1) a debtor borrows money, (2) the debtor signs an agreement to pay back the money plus interest, (3) the debtor sells the item to a third party before the loan is paid off, and (4) the third party promises the debtor that he or she will pay the remainder of the loan to the creditor.
Ways to discharge by agreement: (4)
Mutual Rescission, Substituted Contract, Novation, Accord and Satisfaction
A party who owes a duty of performance.
A party who is owed a right under a contract
Personal Service Contract
A type of contract that cannot be assigned without prior consent of contracted parties.
Notice of Assignment
Assignee notifies obligor that assignment has been made and that performance must be rendered to assignee.
Requires that the obligor approve any assignment of a contract.
American Rule of Successive Assignment i.e. New York Rule
If obligee makes multiple successive assignments of rights, the first assignment (in time) prevails.
English Rule of Successive Assignment
If obligee makes multiple successive assignments of rights, the first assignee to give notice to the obligor prevails.
Restrictions to Delegations
Personal service contracts, contracts where performance would materially vary.
Assignment and Delegation
When both rights and duties are transferred
Parties involved in a donee beneficiary contract
Promisee, Promisor, Donee Beneficiary
Parties involved in a creditor beneficiary contract
Debtor (Promisor), Creditor (Promisee), New buyer (New promisor), Original Debtor (New promisee)
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