Test covers 7, 9, & 10
Third Party Rights
• Assignment of Rights
➢ Example: Mortgage signed between Brian and Wells Fargo. Wells Fargo
(assignor) takes the mortgage and assigns it to Bank of America (assignee).
Wells Fargo now steps out of the situation and is no longer involved.
• Delegation of Duties
➢ Example: building a house. Brian agrees to pay $100,000 to the builder to
build him a house. The builder will subcontract an electrician. If the
electricity doesn’t work, Brian sues the builder and the builder can then sue
the electrician. The builder is ultimately responsible for everything working.
• Third Party Beneficiary Contract
➢ Example: Life insurance policy. Brian takes out a life insurance policy with
State Farm for $100,000 and agrees to pay State Farm every month. Brian
won’t ever benefit from the life insurance policy because he has to die.
Therefore, his family will benefit and are called beneficiaries – intended
beneficiary. If State Farm does not pay after Brian’s death then they are
entitled to sue State Farm.
• Incidental Beneficiary
➢ Example: There is a large amount of land behind Brian’s house and a
contractor wants to develop the land. The contractor does not end up
developing and Brian wants to sue because the development would have
benefited him and his property value. He cannot do this because while they
would have benefitted him, he still has no right to money.
Breach of Contract
Jacob & Youngs v. Kent