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Business Law
Chapter 16
6
Business
Undergraduate 4
03/11/2010

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Cards

Term
Privity of contract
Definition
Refers to the private nature of the agreement between the parties who have entered into it.  These parties alone have right and liabilities under the contract.
Term
Assignment
Definition
Transfer of contractual rights to a third party.  Like when a lender sells the mortgage to a third party.  Lender is the assignor and the buying third party is the assignee.
Term
Delegation
Definition
Transfer of contractual DUTIES to a third party.  The original obligor delegates the contract duties to a third party and becomes the delegator.  The new third party is the delegatee.  The delegator-obligor is still liable for performance if delegatee fails.
Term
3 rights that can't be assigned
Definition

  1. When a statute expressly prohibits assignment
  2. When an assignment will significantly change the risk or duties of the obligor - ex: assigning insurance coverage to another party.  The insurance company knows nothing of the party
  3. When a contract prohibits assignment.

Term
4 Exceptions to prohibiting assignments
Definition

  1. Can't prohibit assignment of right to collect monetary payments.
  2. Can't prohibit assignment of rights in real estate - ALIENATION (transfer of land ownership)
  3. negotiable instruments - signing over a check can't be prohibited.
  4. Right to receive damages for breach of contract or payment of account owed can't be prohibited.

Term
3 Duties that can't be delegated
Definition

  1. When duties are personal in nature.
  2. When performance by a third party will vary materially from that expected by the obligee
  3. When the Contract prohibits delegation.

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