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WVU BCOR 320 - Chapter 11

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BCOR 320 1nd Edition Lecture 23 Chapter 11: Conclusion to contracts Third Party Beneficiary: Someone who was not a party to the contract but stands to benefit from it. An intended beneficiary may enforce a contract if the parties intended her to benefit and if either:• enforcing the promise will satisfy a duty of the promisee to the beneficiary; or • the promisee intended to make a gift to the beneficiary. Any beneficiary who is not an intended beneficiary is an incidental beneficiary, and may not enforce the contract.Assignment and delegation: A contracting party may transfer his rights under the contract, which is called an assignment of rights. A contracting party may transfer her duties pursuant to the contract, which is a delegation of duties.The assignor is the one making an assignment and the assignee is the one receiving an assignment.Assignment: Any contractual right may be assigned unless assignment:• (a) would substantially change the obligor’s rights or duties under the contract; or• (b) is forbidden by law or public policy; or(c) is validly precluded by the contract itselfRights of the parties after assignment:These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute. Once the assignment is made and the obligor notified, the assignee may enforce her contractual rights against the obligor. The obligor may generally raise all defenses against the assignee that she could have raised against the assignor.Delegation of duties: Most duties are delegable. But delegation does not by itself relieve the delegator of his own responsibility to perform the contract. An obligor may delegate unless• (1) delegation would violate public policy, or• (2) the contract prohibits delegation, or• (3) the obligee has a substantial interest in personal performance by the obligor.Discharge: A party is discharged when she has no more duties under a contract. Most contracts are discharged by full performance. Sometimes the parties discharge a contract by agreement. Rescind means that they terminate it by mutual agreement.Performance:  Strict Performance• Performance that is exactly what promised; is usually not expected and failure to do so does not cause for discharge. Substantial Performance• A party that substantially performs its obligations will receive the full contract price, minus the value of any defects.• A party that fails to perform substantially receives nothing on the contract and will only recover the value of the work, if any.Good Faith: The Restatement (Second) of Contracts §205 states: “Every contract imposes upon each party a duty of good faith and fair dealings in its performance and its enforcement.”Breach: Material Breach• Generally courts will discharge only if a party committed a material breach – one that causes substantial harm. Impossibility• A court will discharge an agreement if performing a contract was truly impossible but not if honoring the deal merely imposed a financial burden. True impossibility means that something has happened making it utterly impossible to do what the promisor said he would do.  Statute of Limitations• Will limit the time within which the injured party may file suit.Impossibility: True Impossibility• Something has happened making it utterly impossible to fulfill the promise.– Destruction of subject matter of contract– Death of promisor in a personal services contract– IllegalityRemedies:  Expectation Interest• Designed to put the injured party in the position she would have been in had both sides fully performed their obligations.– Compensatory (direct) damages– Consequential damages– Incidental damages Reliance Interest• Designed to put the injured party in the position he would have been in had the parties never entered into a contract.Identifying the interest: Restitution Interest• Designed to return to the injured party a benefit that he has conferred on the other party, which it would be unjust to leave with that person. Equitable InterestWhen money is not sufficient to help the injured party, a court may order a transfer of property or may issue an injunction to prevent a particular action from


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