CHAPTERS 15 and 16
Third Party Rights and Discharge
Assignees: The parties to a traditional contract or e-contract can transfer their rights under the contract to other
The party who owes a duty of performance is called the obligor.
A party who is owed a right under a contract is called the obligee.
An obligee who transfers the right to receive performance is called an assignor.
The party whom the right is transferred is called the assignee.
The assigne can assign the right to yet another person called a subsequent assignee or sub-assignee.
Personal Service Contracts: a contract between and employee and an employer. The
responsibilities of the employee are clearly defined. Employees are not required to agree to the
terms of the contract. Counter proposals can occur with a personal services agreement that the
employee does not agree to. Sometimes employers don’t hire person unless they agree to terms.
Assignment of a Future Right
Ex: your aunt leaves you money after she dies in a will.
Assignment increases risk –
Ex: when you take out auto insurance and your premium is based on your record. This type of a
contract is not assignable.
Assignment of Legal Action
Effect of Assignment- what happens after you make the assignment.
Notice of assignment: a notice of an assignment of a chose in action given to the debtor. It is
given for the purpose of completing the assignment and vesting title in the assignee.
Intended Third-Party Beneficiaries: a third party who is not in privacy of the contract but who has rights under
the contract against the obligor.
Ex: You agree with me to clean my mom’s house for $100 if you don’t go through with the action then she or I can
Promises either “Covenants” or “Conditions”
Covenant: an unconditional promise to perform; no conditions. If performance is not done it
becomes a breach of contract.
Condition of Performance: there is usually a condition thrown in the contract. Ex: I ask you to
paint the car red and I will pay you, if you paint the car red and I pay you, if you don’t then I don’t
Discharge of Performance: a party’s duty to perform under a traditional contract or an e-contract may be
discharged by mutual agreement of the parties or by not being able to perform contract.
Discharge by Agreement
1. Mutual Rescission: if a contract is wholly or partially executor on both sides, parties can agree
to cancel contract. This requires both parties to enter into a second agreement that expressly
terminates the first one.
2. Novation: a new party is substituted for one of the original contracting parties. The new party is
then obligated to perform the contract. All three parties must agree to substitution. The existing
party is relieved of the liability.
Ex: You want to buy a car and then tell the dealer that you can’t buy the car anymore but your brother can. Dealer agrees to it. This is a way for 1 party to get out of contract.
Discharge by Impossibility
Occurs if a contract becomes impossible to perform. The impossibility has to be objective
impossibility “it cannot be done” rather than subjective impossibility “I cannot do it”.
This has to happen for it to be considered objective impossibility: death or incapacity of promisor
before personal service contract was performed, destruction of subject matter of a contract before
it was performed, and supervening illegality that makes performance of the contract illegal.
“Force Majeure” Clauses: parties can agree in a contract that if certain events happen happen they will excuse