Chapter 12 - Third Parties, Discharge, and Remedies
assignment as a signing over of rights to a third party.
2. One form of the legal term tender describes an action. It refers to presenting something,
usually money or service, for acceptance. As a noun, tender is the offer itself and not the
payment or service that will satisfy the obligation in question. Have students look on a
dollar bill for the statement “This note is legal tender for all debts, public and private.”
3. Rescission means cancellation or cutting off. The Latin origin of rescind contributed to the
development of the word shed, which means, among other things, “to cast off.”
4. To speculate is to wonder about something. Speculate originates from Latin words
meaning “to spy” and “to look at.”
VII. Related Cases
1. Vaughn owed child support to the state and was brought into court to face contempt
of court charges. In court, he promised to pay his back payments from an inheritance he was
going to receive. Shortly thereafter, he assigned his inheritance to a loan company. A suit
was brought to determine who was to get the inheritance. The court noted that assignments
may be oral or written and assignments are given priority according to when they are
granted. But the court ruled in favor of the loan company because the statements made in
court were not definite enough to be called an assignment. Matter of Estate of Vaughn, 588
P.2d 1295 (Or. App. 1979).
2. A general contractor hired a subcontractor to assist in the construction of a sheriff’s
office. After running into financial trouble, the subcontractor took out a loan and assigned
the future payments from the general contractor to the bank. The general contractor was
notified of this assignment but continued paying the subcontractor instead of the bank. The
bank sued, and the court recognized that when an account debtor is validly notified of an
assignment, the account debtor becomes liable to pay the assignee. The court, however,
refused to grant summary judgment to the bank because of subcontractor defenses possessed
and raised by the general contractor, the assignee. Independent Nat. Bank v. Westmoor
Elec., 795 P.2d 210 (Ariz. App. 1990).
3. AAC sold a helicopter to Hydroplanes, who sold it to Boston Helicopter Charters
(BHC). After the helicopter crashed, BHC filed suit, one of the issues being the extent, if
any, of an implied warranty running from AAC to BHC. The court ruled that through clear
language, AAC disclaimed any implied warranties, thus no assignments of warranty reached
BHC. Boston Helicopter Charters v. Agusta Aviation, 767 F. Supp. 363 (D. Mass. 1991).
4. A contract dispute arose between a seed corn grower and a seed corn buyer. Due to an
infestation of shattercane, the grower was unable to fulfill the terms of the contract, so the
buyer sued. The court ruled that a clause in the contract that allowed for the grower to
release certain acres of fields if certain events occurred, such as infestation, was a condition
subsequent. Once infestation occurred, the grower was no longer obligated to supply the full
amount of seed corn. Schmidt v. J. C. Robinson Seed Co., 370 N.W.2d 103 (Neb. 1985).
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution
without the prior written consent of McGraw-Hill Education.