1. 1.1 12.1 Law for Business, 15e by Ashcroft Chapter 12: Third Parties and Contracts Law for Business, 15e, by Ashcroft, © 2005 West Legal Studies in Business, a Division of Thomson Learning

2. 12.2 Chapter 12 Objectives  Discuss the difference between a third-party beneficiary contract and a novation.  Explain the difference between assignment of a contract and delegation of duties under it.  Describe the different types of contracts involving more than two people.

3. 12.3 Third Party Beneficiaries  Creditor beneficiary: promisee owes an obligation or duty that will be discharged to the extent that promisor performs promise  Donee beneficiary: promisee owes no legal duty but to whom performance is a gift  Incidental beneficiary: incidentally benefits promisee

4. 12.4 Ways to Involve Third Parties  Novation is the termination of a contract and substitution of a new one with the same terms but with a new party.  Assignment is the conveyance of rights to a person not a party.  Delegation is the transfer of duties.

5. 12.5 Technicalities of Assignment  Notice – notice need not be given to other party in order to make the assignment effective as between the assignor and the assignee  Form – an assignment may be made either by operation of law or by the act of the parties  Effect – assignee does not receive any greater right or interest than the assignor held.

6. 12.6 Implied Warranties of the Assignor  That the assignor is the true owner of the right  That the right is valid and subsisting at the time the assignment is made  That there are no defenses available to the debtor that have not been disclosed to the assignee

7. 12.7 Types of Third Party Contracts Joint contracts - obligate two or more people together toward performance Several contracts - when parties agree to perform the same obligation Joint and several contracts - bind two or more people jointly and severally

8. 1.8 12.8 Make sure you understand the concepts in this chapter.