Lesson Plan This Week

# PCL 1L Contracts    [@peoplescollolaw](https://twitter.com/peoplescollolaw) --- # Part I --- ## Midterm Postmortem --- # Part II ## Review ## Third-Party Beneficiaries When a promisor and a promisee make an contractual agreement that the promisor will tender their performance (a benefit) to a party other than the promisee, we have a third party beneficiary situation. --- ## Concepts Promisor and Promisee --- Promisor and Promisee ↘️ Third Party --- ## After Contracting Promisor: owes a duty of performance to the third party Promisee: is owed the performance to the third party Third Party: not in privity of contract, but owed performance by promisor --- ## Overall Analysis Approach problems by asking the following: - Is the third party an intended beneficiary? If so, what kind? - Can the promisor and promisee change contract terms without the third party's consent? - Alternatively, ask have the third party's rights vested? - What are the rights of the parties? --- ## Can the Third Party Beneficiary Sue? - an intended third party beneficiary can sue - an incidental third party beneficiary has **no** contractual rights The latter may benefit, but it is **not** the primary purpose of contract to benefit them --- ## Intended Beneficiary? Frequently the language of the contract will indicate if the promisee intended to confer a right of performance to the third party. If it is not clear in the language of the contract, then the court will look at several factors to determine intent. --- ## Factors to Determine Intent - Is the third party expressly designated in the contract? - Is performance to be made directly to the third party? - Does the third party have any rights defined in the contract? - Does the third party have a relationship with the promisee that would create an inference of intent to benefit? --- ## Which Type of Intended Beneficiary? Ask what the promisee's purpose was in inducing the promisor's performance to the third party. - **Creditor Beneficiary**: the promisee owed the third party an obligation - **Donee Beneficiary**: the promisee wanted to confer a gift on third party --- ## Can the Contracting Parties Make Changes? The promisor and promisee are free to modify, rescind, or discharge the contract as they see fit until the intended beneficiary's rights have vested. --- ## Vesting of Rights An intended beneficiary's rights vest when they… - justifiably rely to their detriment on the promise (change of position) - bring a suit to enforce the promise - manifest assent to the promise at the request of either party --- ## Party Rights and Defenses *Third-Party Beneficiary v. Promisor* - the beneficiary may sue the promisor for failure to perform - promisor's defenses - any defenses that promisor had against promisee - if the promise is not absolute, then promisor can assert the defenses the promisee would have against the beneficiary --- ## Party Rights and Defenses *Third-Party Beneficiary v. Promisee* - **Donee Beneficiary:** generally **no** right to sue promisee - exception where there's been detrimental reliance (change of position) - in that case they are suing under promissory estoppel/detrimental reliance, not as a third-party beneficiary --- ## Party Rights and Defenses *Third-Party Beneficiary v. Promisee* - **Creditor Beneficiary:** can sue for the value of the *pre-existing* debt or obligation --- ## Party Rights and Defenses *Promisee v. Promisor* - promisee may sue for promisor's failure to tender performance to third-party beneficiary - promisee and third-party beneficiary cannot both recover from promisor - courts will sometimes order ***specific performance*** in circumstance where the promisor was to pay for an unpaid debt --- ## Prior FYLSX #### Assignment and Delegation [October 2017 Q3](http://www.calbar.ca.gov/Portals/0/documents/admissions/fyx/FYLSX_OCT2017_SelectedAnswers.pdf) [June 2017 Q1](http://www.calbar.ca.gov/Portals/0/documents/admissions/fyx/FYLSX_June2017_SelectedAnswers_R.pdf) #### Third Party [June 2018 Q1](http://www.calbar.ca.gov/Portals/0/documents/admissions/fyx/FYLSX_Jun2018_SelectedAnswers.pdf) [October 2014 Q4](http://www.calbar.ca.gov/Portals/0/documents/admissions/fyx/October2014FYLSX_SelectedAnswers_R.pdf) --- # Part III ## [Assignment and Delegation](https://hackmd.io/@rdsathene/rywkyjodI) https://hackmd.io/@rdsathene/rywkyjodI Questions, then Cases. --- ### Our cases this week *Lucas v. Hamm* *Erickson v. Grande Ronde Lumber Co.* *Detroit Bank and Trust Co. v. Chicago Flame Hardening Co.* *Rouse v. United States* *Herzog v. Irace* --- :scales: :mortar_board: [@peoplescollolaw](https://twitter.com/peoplescollolaw) :mortar_board: :scales: ---