Contract Assignment: Who Prevails in the Dispute Between Garth's Distributing, Wally Co, and Zeta Corp?

What will happen if Wally refuses to pay Zeta after Garth's Distributing assigned its rights to Zeta in the bottled water contract?

A. Wally prevails because it did not give permission for the assignment
B. Wally prevails because the assignment is for an amount more than the amount that Garth owed Wally so is against public policy
C. Zeta prevails because assignments like this are generally valid
D. Zeta prevails, but only if the assignment is signed and in writing

Answer:

D. Zeta prevails, but only if the assignment is signed and in writing

Final Answer:

If Wally refuses to pay Zeta and Zeta sues Wally, Zeta is likely to prevail as assignments in contracts, such as the one between Garths's Distributing and Zeta, are typically valid.

Explanation:

If Wally refuses to pay Zeta and Zeta sues Wally, then the likely outcome is that Zeta prevails because assignments like this are generally valid. This is the case because, in most jurisdictions, the general rule is that the parties to a contract may transfer their rights or duties under the contract unless prohibited by the contract or materially changing the duties of the other party. In this scenario, Garth's Distributing assigned its rights to receive payment for the bottled water to Zeta, which it was owed a debt by Garth.

Upon informing Wally of the assignment, Zeta legally demanded the payment, which Wally was compelled to make. The contract was silent on assignments, hence not prohibiting such action, and the assignment does not materially change Wally’s duties under the contract. Therefore, Zeta should prevail, irrespective of whether the assignment was written or signed.