Question 1

The rights under a contract for personal services can normally be assigned

Accepted Answer

A)  if all that remains on the deal is a payment of money. 
B)  if the contract is executory. 
C)  if the personal services are unique to the party rendering them. 
D)  under no circumstances. 
A)  if all that remains on the deal is a payment of money. 
B)  if the contract is executory. 
C)  if the personal services are unique to the party rendering them. 
D)  under no circumstances.

Question 2

If a statute expressly prohibits assignment, the particular right in question cannot be assigned.

Accepted Answer

A) True 
 B)False

Question 3

A third party's right to control the details of performance of a contract indicates that the third party is an intended beneficiary.

Accepted Answer

A) True 
 B)False

Question 4

If a contract stipulates that it cannot be assigned, then it cannot be assigned unless the assignment

Accepted Answer

A)  involves ownership rights in real estate. 
B)  is contrary to public policy in most states. 
C)  is pursuant to a contract for a sale of goods. 
D)  operates only in favor of the concerned parties. 
A)  involves ownership rights in real estate. 
B)  is contrary to public policy in most states. 
C)  is pursuant to a contract for a sale of goods. 
D)  operates only in favor of the concerned parties.

Question 5

A-One Landscapers, Inc., owes Friendly Finance Company $5,000. A-One enters into a contract with Suburban Office Park under which A-One promises to maintain the landscaping on Suburban's property. Under the contract, Suburban promises to pay Friendly Finance the amount that will be due A-One until A-One's debt to Friendly Finance is paid. A-One performs as promised, but Suburban does not pay Friendly Finance. Can Friendly Finance succeed in a suit against Suburban? Why or why not?

Accepted Answer

Friendly Finance could succeed in a suit

Question 6

Kay enters into a contract with Life Insurance Company for a policy that designates Mia as the beneficiary. Kay reserves the right to change the designated beneficiary. Mia's rights under the policy are

Accepted Answer

A)  not affected by the reservation. 
B)  subject to any change that Kay makes. 
C)  subject to the first-in-time rule. 
D)  terminated by the reservation. 
A)  not affected by the reservation. 
B)  subject to any change that Kay makes. 
C)  subject to the first-in-time rule. 
D)  terminated by the reservation.

Question 7

When the performance of a contract depends on the personal skill of the obligor, a delegation of the duty is prohibited.

Accepted Answer

A) True 
 B)False

Question 8

Leo contracts to install watering troughs in Ken's dairy barn. When Leo becomes seriously ill, he contracts with Jay to do the work. Jay is unreliable and never shows up. Ken hires Ike to do the installation. To recover for any loss on the deal, Ken can sue

Accepted Answer

A)  no one. 
B)  Jay or Ike. 
C)  Leo only. 
D)  Jay or Leo. 
A)  no one. 
B)  Jay or Ike. 
C)  Leo only. 
D)  Jay or Leo.

Question 9

Molly is a third party beneficiary under a contract between Ned and Otis. Ned and Otis can modify or rescind their contract to take away Moly's rights under the contract without her consent

Accepted Answer

A)  at any time. 
B)  at no time. 
C)  after Molly's rights have vested. 
D)  before Molly's rights have vested. 
A)  at any time. 
B)  at no time. 
C)  after Molly's rights have vested. 
D)  before Molly's rights have vested.

Question 10

Following a transfer by a lender of a right to receive payments on a mortgage, the homebuyer must continue to make those payments to the original lender.

Accepted Answer

A) True 
 B)False

Question 11

A contract between Max and Nick provides for an "assignment of all rights." Max "assigns the contract" to Olin. Because a court will normally construe this wording as implying both an assignment of rights and a delegation of duties, if Olin fails to perform

Accepted Answer

A)  the contract is void. 
B)  the contract is discharged. 
C)  Nick is liable. 
D)  Max is liable. 
A)  the contract is void. 
B)  the contract is discharged. 
C)  Nick is liable. 
D)  Max is liable.

Question 12

Pam borrows $5,000 from Quality Auto Sales to buy a car. When Pam does not pay the loan or return the car, Quality wants to transfers the right to the payment to Rapid Collection Agency. Rapid agrees to pay Quality for this right, but for a price that is less than the amount owed. Can Quality transfer this right to Rapid without Pam's consent? If so, and Quality committed fraud in the deal with Pam, could Pam legitimately refuse to pay Rapid? Explain.

Accepted Answer

Quality can transfer the right to receiv

Question 13

Ira owes Jessie $1,000. Kerry owes Ira $1,000. Ira unconditionally assigns to Jessie the right to Kerry's payment. Jessie's right to the $1,000 is subject to the defenses that

Accepted Answer

A)  Jessie had against Ira. 
B)  Kerry had against Ira. 
C)  Ira had against Kerry. 
D)  none of the choices. 
A)  Jessie had against Ira. 
B)  Kerry had against Ira. 
C)  Ira had against Kerry. 
D)  none of the choices.

Question 14

Any beneficiary to a contract who is not deemed an intended beneficiary is an incidental beneficiary.

Accepted Answer

A) True 
 B)False

Question 15

An accountant can delegate his or her contractual duty to another accountant, even if the contract expressly prohibits it, because accounting is a delegable skill.

Accepted Answer

A) True 
 B)False

Question 16

Steel Mill Inc. and Transport Delivery LLC enter into a contract. UniOil Corporation will indirectly benefit from the deal. Under the principle of privity, UniOil has the right to

Accepted Answer

A)  sue Steel Mill for breach. 
B)  require Transport to perform. 
C)  none of the choices. 
D)  demand performance from both original parties. 
A)  sue Steel Mill for breach. 
B)  require Transport to perform. 
C)  none of the choices. 
D)  demand performance from both original parties.

Question 17

If performance under a contract will vary materially on a delegation of its duties to a third party from that expected by the obligee, the delegation is

Accepted Answer

A)  prohibited. 
B)  permitted on sufficient notice by the obligor. 
C)  permitted if the performance does not require the obligor's personal skill. 
D)  permitted if special trust has been place in the obligor. 
A)  prohibited. 
B)  permitted on sufficient notice by the obligor. 
C)  permitted if the performance does not require the obligor's personal skill. 
D)  permitted if special trust has been place in the obligor.

Question 18

Expressly designating a third party as a beneficiary in a contract indicates that the beneficiary is intended.

Accepted Answer

A) True 
 B)False

Question 19

A contracting party's transfer of the contract rights or duties to another person is an exception to the rule of privity of contract.

Accepted Answer

A) True 
 B)False

Question 20

When the original parties to a contract agree that its performance should directly benefit a third party, that party can sue the promisor directly for breach.

Accepted Answer

A) True 
 B)False

Exam 18: Third Party Rights

The rights under a contract for personal services can normally be assigned

If a statute expressly prohibits assignment, the particular right in question cannot be assigned.

A third party's right to control the details of performance of a contract indicates that the third party is an intended beneficiary.

If a contract stipulates that it cannot be assigned, then it cannot be assigned unless the assignment

Kay enters into a contract with Life Insurance Company for a policy that designates Mia as the beneficiary. Kay reserves the right to change the designated beneficiary. Mia's rights under the policy are

When the performance of a contract depends on the personal skill of the obligor, a delegation of the duty is prohibited.

Leo contracts to install watering troughs in Ken's dairy barn. When Leo becomes seriously ill, he contracts with Jay to do the work. Jay is unreliable and never shows up. Ken hires Ike to do the installation. To recover for any loss on the deal, Ken can sue

Molly is a third party beneficiary under a contract between Ned and Otis. Ned and Otis can modify or rescind their contract to take away Moly's rights under the contract without her consent

Following a transfer by a lender of a right to receive payments on a mortgage, the homebuyer must continue to make those payments to the original lender.

A contract between Max and Nick provides for an "assignment of all rights." Max "assigns the contract" to Olin. Because a court will normally construe this wording as implying both an assignment of rights and a delegation of duties, if Olin fails to perform

Ira owes Jessie $1,000. Kerry owes Ira $1,000. Ira unconditionally assigns to Jessie the right to Kerry's payment. Jessie's right to the $1,000 is subject to the defenses that

Any beneficiary to a contract who is not deemed an intended beneficiary is an incidental beneficiary.

An accountant can delegate his or her contractual duty to another accountant, even if the contract expressly prohibits it, because accounting is a delegable skill.

Steel Mill Inc. and Transport Delivery LLC enter into a contract. UniOil Corporation will indirectly benefit from the deal. Under the principle of privity, UniOil has the right to

If performance under a contract will vary materially on a delegation of its duties to a third party from that expected by the obligee, the delegation is

Expressly designating a third party as a beneficiary in a contract indicates that the beneficiary is intended.

A contracting party's transfer of the contract rights or duties to another person is an exception to the rule of privity of contract.

When the original parties to a contract agree that its performance should directly benefit a third party, that party can sue the promisor directly for breach.

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