Black-letter propositions
- 01
An intended beneficiary may enforce once rights vest through assent, reliance, or suit; an incidental beneficiary cannot.
- 02
Most rights are assignable unless assignment materially changes duty or risk, is prohibited by law, or a valid clause restricts it.
- 03
A gratuitous assignment is generally revocable unless delivered through a protected form; an assignment for value is ordinarily irrevocable.
- 04
Duties may be delegated unless personal skill, trust, contract, or law forbids; the delegator remains liable absent novation.
- 05
Novation is an agreement among relevant parties substituting a new obligor and releasing the original.
Use this attack sequence under time
Frame the issue
Identify promisee, promisor, and third person.
Resolve the next checkpoint
Determine intended versus incidental benefit and vesting.
Resolve the next checkpoint
For assignment, identify right, restriction, consideration, notice, and defenses.
Resolve the next checkpoint
For delegation, test personal nature and continuing liability.
Finish the conclusion
Find express release for novation.
Common wrong turns
- Assignment of 'the contract' often assigns rights and delegates duties but does not itself create a novation.
- A clause prohibiting assignment may be construed differently from one making assignment void.
- The obligor may assert defenses arising before notice against the assignee.
Worked example
A contractor delegates all work to another builder, and the owner never agrees to release the original contractor.
Delegation may be permissible if performance is not uniquely personal, but the original contractor remains liable for defective performance because no novation released it.
Practice this topic
Third-party beneficiaries
Cornell says a third-party beneficiary is a person who is not a party to a contract but may enforce a promise because the contracting parties intended to confer an enforceable benefit. An intended beneficiary is treated differently from an incidental beneficiary, who may receive a benefit from performance but cannot enforce the contract because conferring an enforceable right was not an objective. Merely receiving some advantage is generally not enough. The distinction depends heavily on the language and purpose of the particular contract.
Cornell's classic example is Lawrence v. Fox, where a third party was allowed to enforce a promise made for their benefit.
Assignment, delegation and novation
UCC 2-210(1) says a party may perform through a delegate unless otherwise agreed or the other party has a substantial interest in the original promisor performing, and no delegation relieves the delegating party of any duty or liability. Section 2-210(2) allows assignment of rights unless the assignment would materially change the other party's duty, increase the burden or risk, or impair the chance of return performance. Section 2-210(3) reads a prohibition of assignment of the contract as barring only delegation, and 2-210(4) reads an assignment of the contract as an assignment of rights and a delegation of duties.
Cornell describes novation as an agreement to substitute a new party for an existing one, excusing the original party and requiring both original contracting parties to agree.
Frequently asked questions
What is the controlling rule for beneficiaries, assignment, delegation, and novation?+
Third-party enforcement depends on intended benefit or valid transfer, and delegating performance does not discharge the original obligor without novation.
How should I analyze beneficiaries, assignment, delegation, and novation on the bar exam?+
Identify promisee, promisor, and third person. Determine intended versus incidental benefit and vesting. Find express release for novation.
What is an intended third-party beneficiary?+
A nonparty the contracting parties planned to benefit in a way the jurisdiction treats as enforceable, who may enforce the promise, according to Cornell's summary.
Can an incidental beneficiary sue?+
No. An incidental beneficiary may benefit from performance but cannot enforce the contract because conferring an enforceable right was not an objective.
Does delegating a duty release the delegating party?+
No. UCC 2-210(1) says no delegation of performance relieves the delegating party of any duty to perform or any liability for breach.
When can rights under a goods contract not be assigned?+
When the assignment would materially change the other party's duty, materially increase the burden or risk, or materially impair the chance of return performance, under UCC 2-210(2).
What is a novation?+
An agreement to substitute a new party for an existing one that excuses the original party, and both original contracting parties must agree, per Cornell's summary.