Transfer of Contracts and Remedies for Breach Chapter 12 Transfer of Contracts and Remedies for Breach

12.1 The Transfer of Contractual Rights and Duties After finishing this section, you will know how to: Explain the nature of an assignment Identify contractual rights that can be assigned Explain the nature of delegation Explain the nature of novation Identify a situation involving privity of contract

Assignment- THE TRANSFER OF A RIGHT UNDER A CONTRACT Assignor- THE PARTY WHO TRANSFERS THE RIGHT Assignee- THE PARTY TO WHOM THE RIGHT IS TRANSFERRED Example 1

THIS SHOULD BE WRITTEN, IT IS HARD TO PROVE AN ORAL ASSIGNMENT Example 2 THIS SHOULD BE WRITTEN, IT IS HARD TO PROVE AN ORAL ASSIGNMENT LEGALLY BOUND TO PAY THE ASSIGNEE ONLY Party A Assignor Party B Right Duty Assignment Third Party Asignee

Rights that may be assigned: MOST RIGHTS MAY BE ASSIGNED UNLESS IT CHANGES THE OBLIGATION OF THE OTHER PARTY Example 3 ONLY ASSIGN THE RIGHTS YOU HAVE Most common: PAYMENT OF MONEY, DELIVERY OF GOODS Example 4

Transfer of Duties Delegation- TRANSFER OF DUTY PERFORMANCE OF AN OBLIGATION MAY BE DELEGATED—RESPONSIBILITY MAY NOT Example 5

Commonly called: SUBCONTRACTING Duties that may not be delegated when: A PARTY AGREES TO PERFORM THE SERVICE PERSONALLY THE CONTRACT CALLS FOR THE EXERCISE OF PERSONAL SKILL AND JUDGMENT THE CONTRACT ITSELF PROHIBITS DELEGATION Example 6

Duties that require personal skill and judgment include: TEACHERS, WRITERS, ARTISTS, OR ENTERTAINERS. THE OFFEROR AND THE OFFEREE MAY INCLUDE IN THEIR CONTRACT AN AGREEMENT THAT THE CONTRACT MAY NOT BE ASSIGNED OR DELEGATED. BOTH PARTIES ARE RESTRAINED Example 7

Novation- AN AGREEMENT WHEREBY AN ORIGINAL PARTY TO A CONTRACT IS REPLACED BY A NEW PARTY Example 8 SUBSTITUTION REQUIRES THE CONCENT OF BOTH PARTIES

Third Parties Privity of contract- RELATIONSHIP BETWEEN THE PARTIES TO A CONTRACT DETERMINES WHO CAN SUE WHOM OVER QUESTION OF PERFORMANCE REQUIRED BY A CONTRACT Third-party beneficiary- A PERSON WHO IS NOT A PARTY TO A CONTRACT BUT WHO BENEFITS FROM IT

12.2 Remedies of the Injured Party After finishing this section, you will know how to: Explain the concept of anticipatory breach Identify remedies available for breach of contract Define specific performance Explain why you must minimize the damages involved in a breach of contract

Breach of Contract Breach of contract- WHEN ONE OF THE PARTIES FAILS TO DO WHAT HE OR SHE AGREED TO DO Anticipatory breach- PARTIES TO A CONTRACT NOTIFY THE OTHER PARTY OF THEIR INTENTION NOT TO GO THROUGH WITH THE CONTRACT BEFORE THE TIME FOR PERFORMANCE YOU MAY BRING SUIT AS SOON AS YOU’RE NOTIFIED THAT THE OTHER PARTY TO THE CONTRACT IS GOING TO BREACH THE CONTRACT THIS DOESN’T APPLY TO THE PROMISE OF MONEY—MUST WAIT UNTIL THE DATE THE MONEY WAS PROMISED TO BE PAID BY

Remedies of the Injured Party Remedy- A LEAGAL MEANS OF ENFORCING A RIGHT OR CORRECTING A WRONG The injured party may: ACCEPT THE BREACH ASK FOR MONEY DAMAGES ASK THE COURT TO ORDER THE OTHER PARTY TO DO WHAT THEY AGREED TO DO

Accept the Breach THERE ARE NO DAMAGES SMALL AMOUNT OF DAMAGES Nominal damages- VERY SMALL SUM OF MONEY $1.00 BREACH BUT NO REAL LOSS SUFFERED JUDGMENT LASTS FOR 20 YEARS

Money Damages Damages- PAYMENT RECOVERED IN COURT BY A PERSON WHO HAS SUFFERED AN INJURY BRING THE INJURED PARTY TO THE POSITION THEY WERE IN BEFORE THE CONTRACT

Actual damages- AN AMOUNT OF MONEY AWARDED FOR DAMAGES DIRECTLY ATTRIBUTED TO ANOTHER PARTY’S BREACH OF CONTRACT Example 9: Contract Price $10,000 - Market Price 8,000 Actual Damages 2,000

Incidental damages- ANY REASONABLE EXPENSES RESULTING FROM A BREACH Liquidated damages- DAMAGES AGREED UPON BY THE PARTIES WHEN THEY FIRST ENTER INTO A CONTRACT MUST BE REASONABLE Example 10

Specific Performance Specific performance- INJURED PARTY ASKS THE COURT TO ORDER THE OTHER PARTY TO DO SPECIFICALLY WHAT HE OR SHE AGREED TO DO Example 11

Minimizing Damages Mitigation of damages- INJURED PARTY MUST TAKE ALL REASONABLE STOPS TO MINIMIZE DAMAGES Example 12

Assignment Page 249 #1-5 and CT Page 255 #1-4 and CT