Contracts 8

An owner who entrusts goods to a MERCHANT who deals in goods of the kind has NO RIGHTS against a bona fide purchaser

Facts to watch for

• 1) Merchant who
• 2) Deals in goods
• 3) of the kind

Thus, if any of those three are missing, the owner has rights against the third-party

an INTENDED beneficiary can enforce the contract once his/her RIGHTS HAVE VESTED

Notes—

• 1) rights become vested when the TPB knows about the K or when he/she benefits from it
• 2) only the INTENDED TPB has rights
• 3) once vested, the intended TPB must consent to any modifications or recessions of the K
• 4) promisor is liable to intended TPB for breach
• 5) promisee is liable to intended TPB for promisor's breach if TPB was also a CREDITOR beneficiary (i.e., promisee's purpose was to satisfy debt to TPB) [rare]

Can delegate without consent of obligee (person to whom performance is owed)

EXCEPTIONS (delegation w/o consent will be a breach of K)

• 1) contrary language in K, or
• 2) special skills or reputation

• Need language of a PRESENT ASSIGNMENT (mere promise to assign in the future is not effective)
• Can't SUBSTANTIALLY increase obligor's duties
• Last-in-time GRATUITOUS assignment prevails
• FIRST-in-time PAID-FOR assignment prevails against all others (EXCEPT where subsequent assignee for consideration (i) does not know of prior assignment, and (ii) is first to get payment or a judgment against obligor)