Book Opener

CHAPTERASSESSMENTSection 12.1 The Transfer of ContractualRights and Duties● The transfer of a right under a contract is anassignment. The party who transfers the right isthe assignor. The party to whom the right istransferred is the assignee. No consideration isnecessary for an assignment to be valid. It’s bestto put an assignment in writing, because an oralassignment can be difficult to prove.● Most rights can be assigned unless the assignmentchanges the obligations of the other partyto the contract in an important way. Rights to thepayment of money (e.g., wages, money owed onaccounts, or royalties on books) and rights to thedelivery of goods are the most common types ofrights that are assigned.● Duties may sometimes be transferred. The transferof a duty is called a delegation. Duties maynot be delegated when a party agrees to performthe service personally, the contract calls for personalskill and judgment, or the contract itselfprohibits delegation. Usually, the work of teachers,writers, artists, or entertainers cannot be delegatedto others. Such persons are selected to performtheir services because of their particular skills ortalents. Another person would not be able toperform the services in the same manner.● A novation is the resulting agreement when anoriginal party to a contract is replaced by a newparty and all the involved parties agree to theassignment. The other terms of the contractgenerally remain the same as those in theoriginal contract.● A contract establishes a binding relationshipbetween parties. This relationship is called privityof contract. With the exception of third-partybeneficiaries, only parties with privity havestanding to sue under a contract.Section 12.2 Remedies of the Injured Party● Contracts are usually breached after the time ofperformance has begun. Sometimes, however,one of the parties notifies the other before thetime of performance that he will not perform.This breach is called anticipatory breach. Manystates now permit the injured party to bring anaction for damages immediately, without waitingfor the actual time for performance to arrive.The principle of anticipatory breach does notapply to promises to pay money at some futuredate. Someone who refuses to pay money owedon a future date cannot be sued until after thepayment is due.● When a contract is breached, the injured partyhas a choice of accepting the breach, suing fordamages, or asking the court for an equitableremedy. Accepting the breach is generally thebest choice if no damages have been suffered.Damages awarded to recognize a breach thatdid not cause loss often amount to less than onedollar. Suing for damages allows the injuredparty to recover compensation that would placehim or her in the position that he or she wouldhave been if the contract had been carried out.An injured party may seek an equitable remedywhen money does not adequately compensatefor the loss suffered by the breach of contract.Two chief equitable remedies are specificperformance and an injunction.● Sometimes no amount of money damages issufficient to fix a breach of contract. In suchcases, courts will order the other party to dospecifically what she agreed to do. This remedyis called specific performance, and it will beinvoked to satisfy a unique subject matter such asa painting or a parcel of land.● The principle of mitigation states that even if youare the innocent party, you must try to minimizedamages that might result from the other party’sfailure of performance.256 Unit 2: Entering Into Contracts