Delegation
Contractual duties in a bilateral
contract that are delegated to a 3rd party.
Duties
That Cannot be Delegated
When special trust has been
placed on the obligor.
When performance requires
personal skill or talents.
When performance will vary
materially from obligee expectations.
When the contract expressly
prohibits delegation.
Effect
of a Delegation
Delegator remains liable.
Delegatee liable if delegation
contract creates a third party beneficiary relationship in the obligee.
Assignment
of “All Rights”
Assignment of rights and a delegation
of duties.
Third
Party Beneficiaries
Original parties to the contract
intend at the time of contracting that the contract performance directly benefits
a third person.
Types
of Intended Beneficiaries
ü Creditor
Beneficiaries.
ü Donee
Beneficiaries.
ü Modern
View: Does not draw such clear lines and
distinguishes only between intended beneficiaries and incidental beneficiaries.
The
Vesting of an Intended Beneficiary’s Rights
For third party beneficiary
contract to be effective, rights under the contract must vest:
§ Third party’s
manifesting assent to the contract.
§ Third party’s
materially altering position in detrimental reliance on the contract.
Intended
v. Incidental Beneficiaries
Intended:
Promisee intended to confer on
the beneficiary the right to bring suit to enforce the contract.
Factors:
•
Performance
is rendered directly to 3rd party.
•
3rd
party’s right to control contract details.
•
3rd
party expressly designated as beneficiary.
Incidental.
§ Contract between
two parties is unintentional.
§ Incidental beneficiary
cannot sue to enforce the contract.
Case 15.3: Vogan v.
Hayes Appraisal Associates, Inc. (1999).
