1. OBE 118, Section 3 Fall 2004 Professor McKinsey
Enforceable Contract
Rights and Duties of parties to a contract
Third Parties
Performance
OBE 118, Section 3
Fall 2004
Professor McKinsey

2. Rights and Duties Party B Party A
For every promise there is a corresponding consideration/ obligation.
This makes up an exchange that is a duty by the promisor and a right by the promisee (We also say “obligor” and “obligee”)
Party A and Party B are in “privity of contract”

3. A Valid Enforceable Contract
Mutual Agreement
Consideration
Capacity
Legality
Genuineness of Assent
Writing

4. Third Parties
A party other than the promisor and the promisee can become involved as a “party” to a contract
- By assignment or delegation
- As a third party beneficiary

5. A contract right can be assigned
Assignments of Rights
A contract right can be assigned
- Assignee can enforce contract
- The assignor loses the right
- Some rights cannot be assigned
1) Statutory forbiddance
2) Contract specifies no assignment
3) Personal contracts
4) If assignment would materially increase duty
- Notice of the assignment
1) Ensures priority if multiple assignees
2) Ensures performance to assignee

6. A contract duty can be delegated
Delegations of Duties
A contract duty can be delegated
- Usually original promisor (obligor) is still liable
- New “obligee” can “assume the duty” and thus become liable to original promisee
- Some duties cannot be delegated
1) Personal skill of obligor
2) Special trust in obligor
3) Will cause material change in performance
4) Contract expressly prohibits

7. Third Party Beneficiaries
Intended Beneficiaries
A party for whose benefit the contract was made
Party has right and can sue to enforce
Make sure right has vested (notice or reliance)
When is a beneficiary intended?
Was performance to be to the 3rd party directly?
Does 3rd party have right to control performance?
Was the designation as intended beneficiary expressly made?

8. Absolute Promise Party B Party A
A simple promise in exchange for another promise, with no conditions or qualifications.
Party A
Party B
$$$
Good
Neither party is required to act first, but once a party tenders performance, the other party is then obligated to perform as well.

9. Performance can be conditioned on some possible future event.
Conditioned Promises
Performance can be conditioned on some possible future event.
Condition Precedent
A condition that must be met before performance is due
Condition Subsequent
A condition that ends the obligation to perform
Concurrent Conditions
When performance must occur simultaneously

10. An Example
Good
Party A
Party B
$1000

11. Performance
Each enforceable promise in a valid enforceable contract creates a duty that must be discharged by performance, breach, agreement, or law.
Duty