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Can a later contract excuse performance?
accord and satisfaction
What is rescission?
Cancellation is valid if there is performance still remaining on EACH contracting parties
Accord and Satisfaction
Accord: agreement to accept different performance in satisfaction of existing obligation (consideration requires LESS performance of the same thing)
Satisfaction: New agreement performance excuses old.
- if no performance, may sue on either obligation.
look for IF THEN language to distinguish from modification
- accept a Different AGREEMENT in satisfaction of existing obligation
- agreement that D will do something instead of obligation.
Novation: agreement between BOTH parties to an existing K to substitute a party. SAME performance, DIFFERENT parties.
Liability: excuse the party who is replace FROM PERFORMANCE
Distinguish delegation: no agreement of both parties, and NO excuse
Excuse of performance by a later unforseen event
happens AFTER K formation but Before completion and makes performance IMPOSSIBLE or commercially IMPRACTICABLE, or frustrates the purpose.
Look for an affect on ABILITY to perform not just the cost.
Does damage or destruction of property after the K excuse performance?
Yes if was a unique good that cannot be replaced. Impossibility
No if it was something that could be built again, or if starting over would create performance. Impracticability
Destruction in a sale of goods contract
First decide who bears the RISK of LOSS.
If on seller - buyer may sue for non-performance if goods are one of a kind, special and not in mass production like grits.
What is the effect of death after contract?
K obligations do not disappear nor is performance excused - may require an action against the state.
UNLESS it is a service contract or sale of goods with a person who is special. Impossibility created.
What is the effect of subsequent laws or regs on performance
Later law making performance illegal is a valid excuse.
Later later make mutually understood purpose illegal, excuse because of frustration of purpose. Both parties must know of purpose
Third party beneficiary contracts
1 contract, with 2 people, benefiting a third party, who is NOT a party to K.
Promisor - makes promise that benefits 3d party
Promisee - party who obtains the promise that benefits third party.
If not 3d party beneficiary then incidental beneficiary.
Can 3d party intervene if a K is being changed or modified?
Yes, if rights are have vested, KNOWLEDGE plus some reliance or assent. K cannot be modified.
Can 3d party beneficiary recover from promisor?
Who can the promisee recover from in k benefiting 3d parties
promisor and beneficiary but not both
Can beneficiary recover from promisee
No, unless it is a creditor beneficiary who can recover from promisee but only on preexisting debt.
What is an assignment?
Transfer of rights under K in a contract between TWO parties where one later transfers rights under K to 3d party.
What can be transferred?
Offer may not be but a K can.
Requires TWO steps, rather than 3d party contracts which name 3d party in the instrument itself.
Are there limitations on assignments?
Yes. Contract provision may prohibit assignment or invalidate them.
Prohibition takes the right of assignment away but not power. Therefore assignor is liable for breach, assignee if unaware of clause may still enforce.
Validation - no enforceability
What if no explicit language in K bars assignments?
CL bars assignments that substantially change the duties of the obligor.
Assignment of a right to payment is OK, but right to contract performance other than payment is NOT.
Is consideration required for an assignment?
No but then may be revoked
Rights of assignee
May recover from obligor.
Obligor has same defense against assignee as against assignor
Assignor, for consideration, cannot recover from obligor.
Payments by obligor are effective until obligor knows of the assignment.
Modifications are effective even if obligor doesn't know of the assignement
What are assignor rights?
May not recover from the obligor if the assignment was for consideration
Implied warranties of assignor in an assignment for value
That Right assigned exists
not subject to existing defenses by obligor
assignor will do nothing to impair value of assignments
but, does not warrant what obligor will do after assignment
What is the effect of multiple assignments?
For gratuitous assignments the LAST assignee wins
Assignments for consideration: first assignee for consideration wins, EXCEPT: sub assignee for value takes only if BOTH:
didn't know of the assignment
four horsemen, payment, judgment, novation or indicia of ownership
What is the Maryland rule for multiple assignments?
First assignee with consideration to notify the obligor wins.
What if a dispute arises from a person performing K she didn't make?
This may be due to a delegation of duties.
What is a delegation of duty?
Transfers the burden of K, like the work of K to 3d party.
In the real world delegation includes benefit.
what duties are delegable
All are unless contract prohibits OR for personal service contracts that need SPECIAL skills
what is the effect of the non-performance by delegatee
delegating party always liable
delegatee liable if rec's consideration from delegating party, may then obligor may recover from delegatee as a 3d party beneficiary.
If no consideration: then delegatee no liable nor can assignor recover from assignee.
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