Restat 2d of Contracts, § 318

• Restatement of the Law, Second, Contracts
• Chapter 15- Assignment and Delegation
• Topic 1- What Can Be Assigned or Delegated
• § 318 Delegation of Performance of Duty

(1) An obligor can properly delegate the performance of his duty to another unless the delegation is contrary to public policy or the terms of his promise.
(2) Unless otherwise agreed, a promise requires performance by a particular person only to the extent that the obligee has a substantial interest in having that person perform or control the acts promised.
(3) Unless the obligee agrees otherwise, neither delegation of performance nor a contract to assume the duty made with the obligor by the person delegated discharges any duty or liability of the delegating obligor.

Comment:

a.  Duty and condition.  A contractual performance may discharge the duty of a performing obligor, or it may satisfy a condition of the right of a performing obligee to a return performance. Where the same person is both obligor and obligee, the same performance may both discharge his duty and satisfy a condition of his right. The propriety of delegation is in general governed by the same standard whether the issue is performance of a duty or performance of a condition. In the interest of simplicity of statement, however, the rules are stated in two separate sections. This Section deals with delegation of performance of a duty; delegation of performance of a condition is the subject of § 319.

Illustrations:

1. A owes B $ 100, and asks C to pay B. Payment or tender to B by C has the effect of payment or tender by A.

2. A contracts to deliver to B coal of specified kind and quality. A delegates the performance of this duty to C, who tenders to B coal of the specified kind and quality. The tender has the effect of a tender by A.

3. A contracts to build a building for B in accordance with specifications, and delegates the plumbing work to C. Performance by C has the effect of performance by A.

b.  The duty of the person delegated.  The rules stated in this Section applywithout regard to whether the person delegated has a legal duty to render the performance in question or whether he acquires a legal right to render it or to receive a return performance. The person delegated may be an agent, gratuitous or otherwise, of the delegating obligor. For such cases this Section is a particular application of Restatement, Second, Agency § 17. Or the person delegated may be an assignee of a related right, entitled to enforce it for his own benefit. See Restatement, Second Agency §§ 14G, 14H. In either case he may or may not promise the obligor to render the performance. If he does so promise, the obligee may in some cases be an intended beneficiary of the promise, with the consequences stated in Chapter 14.

Illustration:

4. In Illustrations 1, 2 and 3, the stated consequences are not affected by the fact that C is an agent of A or an assignee of A's right to return performance or that C has or has not assumed A's duty.

c.  Non-delegable duties.  Delegation of performance is a normal and permissible incident of many types of contract. See Uniform Commercial Code § 2-210, Comment. The principal exceptions relate to contracts for personal services and to contracts for the exercise of personal skill or discretion. Compare § 317. Even where delegation is normal, a particular contract may call for personal performance. Or the contract may permit delegation where personal performance is normally required. In the absence of contrary agreement, Subsection (2) precludes delegation only where a substantial reason is shown why delegated performance is not as satisfactory as personal performance.

Illustrations:

5. A, a teacher employed in a public or private school, attempts to delegate the performance of his duties to B, a competent person. An offer by B to perform A's duties need not be accepted, and actual performance by B without the assent of the employer will create no right in either A or B to the salary stated in A's contract.

6. A contracts with B, a corporation, to sing three songs over the radio as part of an advertisement of B's product. A's performance is not delegable unless B assents.

7. A contracts with B that A will personally cut the grass on B's meadow. A cannot effectively delegate performance of the duty to C, however competent C may be.

8. A, a corporation, contracts with B to build a building. A delegates the entire performance to X and Y, the sole stockholders of A. Performance by X and Y in accordance with specifications discharges A's duty, since the supervision is not materially changed.

d.  Delegation and novation.  An obligor is discharged by the substitution of a new obligor only if the contract so provides or if the obligee makes a binding manifestation of assent, forming a novation. See §§ 280, 328 and 329. Otherwise, the obligee retains his original right against the obligor, even though the obligor manifests an intention to substitute another obligor in his place and the other purports to assume the duty. The obligee may, however, have rights against the other as an intended beneficiary of the promise to assume the duty. See Chapter 14.

Illustrations:

9. A borrows $ 50,000 from B and contracts to repay it. The contract provides that, if a corporation C is organized and assumes the debt under described conditions, A will be under no further obligation. C is organized and in good faith assumes the debt as provided. A is discharged.

10. A contracts with B to cut the grass on B's meadow. A delegates performance to C, who contracts with A to assume A's duty and perform the work. C begins performance with B's assent, but later breaks the contract. C is liable to B, but A is not discharged.

To reduce complexity of statement, Subsections (1) and (2) as they appeared in former § 160 are left to comment, and delegation of performance of a condition is made the subject of § 319. Both Sections employ the language of Restatement, Second, Agency § 17 and Uniform Commercial Code § 2-210, without change of substance from the former Restatement.

See 3 Williston, Contracts §§ 411-411A (3d ed. 1960); 4 Corbin, Contracts §§ 865-66 (1951 & Supp. 1980).

Comment a.  Illustrations 1-3 are new.

Comment b.  Illustration 4 is new.

Comment c.  Illustrations 5, 7 and 8 are respectively based on Illustrations 2-4 to former § 160. As to Illustration 7, see also Union Bond and Trust Co. v. M and M Wood Working Co., 256 Or. 384, 474 P.2d 339 (1970). Illustrations 6 and 8 are new. As to Illustration 8, compare Macke Co. v. Pizza of Gaithersburg, 259 Md. 479, 270 A.2d 645 (1970) (containing a review of the authorities); Milton L. Ehrlich, Inc. v. Unit Frame & Floor Corp., 5 N.Y.2d 275, 184 N.Y.S.2d 334, 157 N.E.2d 495 (1959).

Comment d.  Illustration 9 is new; compare Ramey v. Koons, 230 F.2d 802 (5th Cir. 1956); J.R. Simplot Co. v. Chambers, 82 Idaho 104, 350 P.2d 211 (1960); Lee v. Ravanis, 349 Mass. 742, 212 N.E.2d 480 (1965). Contrast Smith v. Wrehe, 199 Neb. 753, 261 N.W.2d 620 (1978), in which the language of the agreement did not support a finding of novation. Illustration 10 is based on Illustration 4 to former § 160; compare United New York Sandy Hook Pilots Ass'n v. Rodermond Indus., 394 F.2d 65 (3d Cir. 1968); Brown v. Bowers Constr. Co., 236 N.C. 462, 73 S.E.2d 147 (1952).

ALR Annotations:

Principal's payment to or settlement with agent as affecting former's liability to third person with respect to contract negotiated by agent. 71 A.L.R.2d 911.
Tax liabilities as within agreement for assumption or payment of another's obligations. 4 A.L.R.2d 1314.

Digest System Key Numbers:

Assignments 19
Contracts 280(2)