Chapter 6 Contracts October 6th 2014 6 3 Assignment Delegation Commonly Used Contracts Clauses Learning Objectives Learn about assignment and delegation Examine novation Explore restrictions on assignment exculpatory clauses noncompete clauses mandatory arbitration clauses acceleration clauses and liquidated damages clauses Explore the parol evidence rule Assignment and Delegation Contract elements are important o Contracts possess certain qualities that prohibit parties from acting in certain ways unless those qualities are expressly waived Contracts are assigned and delegable by law o Assignment Ability to transfer rights conveyed by a contract to o Delegation Ability to transfer duties imposed on a party by a another party contract to another party Restriction on Assignment Clause that prohibits parties from transferring the rights conveyed by a contract to another party Way to excuse oneself from this liability is to form a three way novation with the original party and the new party thereby excusing the exiting party from future liability arising under the contract o Novation Agreement that transfers all rights and duties to a new party to the contract and releases the previous party from any further obligation arising from the original contract Exculpatory Clause Express limitation on potential or actual liability arising under the subject matter of the contract Other Clauses Mandatory arbitration clause Contractual clause that requires the parties to a contract that contains such a clause to submit to mandatory arbitration in the event of a dispute arising under the contract o Frequently foreclose any possibility of appealing arbitration awards in court Accelerated Clause Type of clause that accelerates all payments due under the contract on breach Liquidated damages clause Type of clause that sets the amount of damages in the event of breach Assumption of a Written Contract Legal assumption made about contracts that they contain the entire expression of the parties agreement Major assumption made about a written contract is that it is integrated o Integrated Legal assumption made about contracts that they contain the entire expression of the parties agreement o Parol evidence Statements or actions that are not captured within the four corners of the contract Statements or actions that are not captured in the contract are considered parol evidence and they will not be used to interpret the meaning of the contract
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