Page 61

Question 1

Is a member of the public that benefits from a promise of a government contract considered an intended beneficiary that can bring suit?

Answer 1

Not usually, even if the performance is rendered directly to him or similar members of the public

Question 2

What are the exceptions to the rule that government contracts to the public don’t consider individual members to be intended beneficiaries?

Answer 2

• if there is an intention manifested in the CONTRACT that the promisor will compensate the public for injuries from breach
• government is liable to the public for damages if NO PERFORMANCE given and a direct action against the promisor is consistent with the terms of the contract.

Question 3

Because it is hard to know if an exception applies to government contracts and third-party beneficiaries, what are the basic rules to follow?

Answer 3

If the group is small and well defined (homebuyers or tenants) or the government suffers no damages from the breach, the public is likely an intended beneficiary.

Question 4

What is a performance bond?

Answer 4

Often seen in construction contracts where a general contractor gives a bond as surety guaranteeing he will perform.

Question 5

What is a payment bond?

Answer 5

When a surety guarantees that the subcontractor will be paid in a construction contract.

Question 6

What options does a subcontractor have to recover a payment bond if the general contractor doesn’t pay, considering if the project is a private owner or a public owner?

Answer 6

• private: can file a lien on the owner’s property for the value of the work performed, so either the owner has to pay or suffer foreclosure if a general contractor doesn’t pay.
• public: subcontractor can sue the surety
• modernly: subcontractor can recover against the sureties in both private and public cases in order to keep the costs of construction down since subcontractors won’t worry about nonpayment.

Question 7

If a general contractor doesn’t pay a subcontractor, what can be done if there was a performance bond?

Answer 7

The unpaid subcontractor can enforce the contract against the surety as a third-party beneficiary

Question 8

What is involved in an assignment?

Answer 8

Transfer of a contract right by any manifested intention to make a present transfer

Question 9

If someone shows intention to transfer rights in the future, is that an assignment?

Answer 9

No, must be present (might be a contract to assign).

Question 10

Once an assignment has happened, the assignor’s legal interest in the right is what?

Answer 10

Extinguished and the right becomes the property of the assignee (who has a direct right against the obligor).

Question 11

What does the law think about assignments?

Answer 11

It favors them and wants people to freely assign their rights under contract

Question 12

What is the difference between rights and duties?

Answer 12

Ie: I am going to sell you my car for $5000

• I have a right to $5000 and a duty to deliver the car
• you have a right to get the car and a duty to pay

Question 13

Are all contract rights assignable?

Answer 13

Yes and they are freely revocable before they have vested

Question 14

What are the times that a right cannot be assigned?

Answer 14

• if it would materially change the duty of the obligor
• materially increase the burden or risk on him
• materially impair his chance of getting the return promise

Question 15

What is the proper way to make an assignment?

Answer 15

• describe the right
• use words of present transfer (“sell, transfer, give, convey”)
• ie: “I hereby assign to you the right to $5000 for my car”

Question 16

Must there be consideration for an assignment?

Answer 16

No, it can be gratuitous

Question 17

What UCC article governs assignments?

Answer 17

9

Question 18

Is it possible to restrict the rights to assign contract rights?

Answer 18

Usually no

Question 19

What is the article 9 UCC filing system?

Answer 19

Anyone claiming a security interest in personal prop and all assignees of contract rights file a public statement in the office of the public official giving notice that the filing party is a creditor claiming a security interest in the prop or one who claims an assignment of rights from the debtor. This gives the party priority, so others must check the records that give them warning if the rights have already been assigned

Question 20

What is good will?

Answer 20

The favor a business wins from the public

Question 21

What are the major roles in an assignment?

Answer 21

• obligor: the other non-assigning party to the original contract
• assignor: the transferor of rights under the original contract
• assignee: person entitled to receive the right because of the assignment