16. Can the debtor justifiably insist that the payment date for the rest of the installments is the fifth of each month?

When one person enters into a valid contract with a second person, this contract does not contemplate performance to or by a third party. However, if one of the parties seeks to transfer her rights and/or duties under the contract to a third party, this is called an «assignment.» Generally, all contractual rights may be assigned, with several exceptions.

An assignment establishes privity of contract between the obligor and the assignee while extinguishing privity between the obligor and the assignor (the original contracting parties). The assignee then replaces the assignor as the real party in interest, and he alone is entitled to performance under the contract. Once the obligor has knowledge of the assignment, he must render performance to or pay the assignee.

The assignee will generally stand in the shoes of the assignor, which means the assignee will receive the rights subject to any defenses, set-offs, and counter-claims that the obligor could have asserted against the assignor.

Generally, the modification of an existing contract in a way that solely benefits one party requires new consideration so that it is not simply the performance of a pre-existing duty, but a bargained-for modification to the original contract.

A condition is an event that must occur before a party is required to perform under a contract. A condition may be express, meaning the parties agreed to it. Rest. 2d. § 226. A condition may be waived by the party whose performance was conditional by performing even if the condition has not been fulfilled.

D is correct. When the creditor told the debtor on March 1 to date the checks with the fifth instead of the first going forward, and the debtor agreed, they modified their contract regarding when the payment was due each month. The creditor also instructed the debtor to make future payments with cashier's checks. In this agreement to modify the contract, the creditor benefitted from receiving cashier's checks going forward and the debtor benefitted from the later due date each month, which is sufficient consideration for the modification. Moreover, the creditor (assignor) assigned the debtor's (the obligor) debt to the bank (the assignee), and the assignee then stands in the shoes of the assignor. As such, any valid claims the obligor had against the assignor would also be enforceable against the assignee. The debtor can thus justifiably insist on the later payment date with the bank.

A is incorrect. This is an incorrect statement of the law. There is no such rule that makes an otherwise valid contract modification ineffective where an assignee had no notice of it. There is a rule, however, that the assignee stands in the shoes of the assignor, meaning whatever claims and defenses that could have been brought against the assignor could also be brought against the assignee, and notice of each of those claims or defenses is not required.

B is incorrect. This is not a case involving a condition or waiver of a condition. The change of the original due date from the first of the month to the fifth was not simply a waiver of a condition. The parties mutually agreed to modify the existing terms and that agreement was supported by sufficient consideration, as explained above. The bank then succeeded to the contract as it stood at the time of assignment, which was after the modification had been effectuated.

C is incorrect. This answer reaches the correct answer with the wrong reasoning. The debtor will be able to insist on the later due dates, but not because the creditor waived a condition or attempted to reinstate the condition upon assignment. Again, this case does not involve the waiver of a condition. The parties modified the contract by mutual agreement prior to the assignment to the bank, changing the terms that specified the time payments were due and the form of payments. This is not a case where the creditor has waived prompt payment under the contract. The parties mutually agreed to modify the contract. If there had been no modification, but simply a waiver of the due date by the creditor, then the assignee-bank would have had the right to reinstate the condition that payments be made on the first of the month.