Question 1

Expectation interest can best be described as money spent in reliance upon the agreement.

Accepted Answer

A) True 
 B)False

Question 2

Ted and Alice own their recreational vehicle subject to a security agreement to Third U.S.Bank to secure the repayment of the purchase money loan.Ted and Alice sell their RV to Bob and Carol,who agree to take over the loan payments to the bank.There is no novation with the bank.Under these facts,if Bob and Carol do not make the loan payments,Third U.S.Bank:

Accepted Answer

A)  can sue Bob and Carol only. 
B)  can sue Ted and Alice only. 
C)  can sue Bob,Carol,Ted,and Alice. 
D)  cannot sue anyone but can repossess the RV. 
A)  can sue Bob and Carol only. 
B)  can sue Ted and Alice only. 
C)  can sue Bob,Carol,Ted,and Alice. 
D)  cannot sue anyone but can repossess the RV.

Question 3

Jerry purchased a state-of-the-art computer for his personal use from Computer City on an installment loan contract thinking he would make monthly payments directly to Computer City.The sales contract stated that in the event the contract is assigned to a third party,the purchaser (Jerry)promises he will not assert any claim or defense against the assignee which he might have against Computer City.Computer City immediately assigns the contract rights to Finance USA.The computer stops working within two weeks of the purchase.

Accepted Answer

A)  This is a valid waiver of defense clause.Jerry signed the contract,so he can't raise a defense to Finance USA. 
B)  Finance USA is an intended third party beneficiary and may therefore enforce the contract. 
C)  In general,this type of waiver is not permitted in consumer contracts,so Jerry can raise his claim against Finance USA. 
D)  This is a delegation of Jerry's duties and the delegator remains liable on the contract unless a novation agreement is made. 
A)  This is a valid waiver of defense clause.Jerry signed the contract,so he can't raise a defense to Finance USA. 
B)  Finance USA is an intended third party beneficiary and may therefore enforce the contract. 
C)  In general,this type of waiver is not permitted in consumer contracts,so Jerry can raise his claim against Finance USA. 
D)  This is a delegation of Jerry's duties and the delegator remains liable on the contract unless a novation agreement is made.

Question 4

Susan took out a life insurance policy on herself,paying all of the premium payments.She named her daughter,Jessica,as the beneficiary under the policy.Jessica has not given anything in consideration for the policy.Jessica is:

Accepted Answer

A)  a donee beneficiary who has rights to enforce the policy once Susan dies. 
B)  a creditor beneficiary who has rights to enforce the policy once Susan dies. 
C)  an incidental beneficiary because Jessica did not give any consideration for the policy and therefore cannot enforce the policy even when Susan dies. 
D)  None of the above. 
A)  a donee beneficiary who has rights to enforce the policy once Susan dies. 
B)  a creditor beneficiary who has rights to enforce the policy once Susan dies. 
C)  an incidental beneficiary because Jessica did not give any consideration for the policy and therefore cannot enforce the policy even when Susan dies. 
D)  None of the above.

Question 5

A third party beneficiary's status occurs:

Accepted Answer

A)  after an assignment and delegation. 
B)  when the third party is informed of the contract. 
C)  when the third party beneficiary agrees to the contract terms. 
D)  when the contract is created. 
A)  after an assignment and delegation. 
B)  when the third party is informed of the contract. 
C)  when the third party beneficiary agrees to the contract terms. 
D)  when the contract is created.

Question 6

The first step a court takes in choosing a remedy is to determine:

Accepted Answer

A)  what interest it is trying to protect. 
B)  if the damages can be quantified with reasonable certainty. 
C)  if punitive damages should be awarded. 
D)  whether the injured party mitigated its damages. 
A)  what interest it is trying to protect. 
B)  if the damages can be quantified with reasonable certainty. 
C)  if punitive damages should be awarded. 
D)  whether the injured party mitigated its damages.

Question 7

Tyron purchased a vacant lot and entered into a contract with BZ Inc.to construct a shopping center on the site.Douglas heard about this contract and built a restaurant on an adjoining piece of property because of the planned shopping center.Tyron was unable to raise the necessary capital and was unable to perform the contract with BZ,Inc.Douglas sued Tyron for breach of contract as a third party beneficiary.Douglas will probably:

Accepted Answer

A)  win as a third party creditor beneficiary. 
B)  win as a third party donee beneficiary. 
C)  lose as a third party incidental beneficiary. 
D)  lose as a third party creditor beneficiary. 
A)  win as a third party creditor beneficiary. 
B)  win as a third party donee beneficiary. 
C)  lose as a third party incidental beneficiary. 
D)  lose as a third party creditor beneficiary.

Question 8

Shirley is an actress under contract with Twentieth Century.Shirley agreed to perform the lead role in a musical to be filmed in Hollywood by Twentieth Century.At the last minute,Twentieth Century decided to scrap the musical and assigned its rights in Shirley to MGM.MGM was planning to film a western in Australia requiring Shirley to spend six months filming in Australia.Can Shirley successfully prevent this assignment?

Accepted Answer

Yes.This assignment of rights would subs

Question 9

An assignment is effective against the obligor from the moment it is made,regardless of whether the assignor notifies the obligor.

Accepted Answer

A) True 
 B)False

Question 10

A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.This is:

Accepted Answer

A)  a valid assignment because of the rule of freedom to contract. 
B)  a valid assignment because this is a simple transfer of the right to receive money. 
C)  an invalid assignment because it increases the burden of the payor. 
D)  an invalid assignment because this is a personal service contract. 
A)  a valid assignment because of the rule of freedom to contract. 
B)  a valid assignment because this is a simple transfer of the right to receive money. 
C)  an invalid assignment because it increases the burden of the payor. 
D)  an invalid assignment because this is a personal service contract.

Question 11

Which of the following duties can probably be delegated?

Accepted Answer

A)  An agreement to perform an operation. 
B)  A contract to paint a picture. 
C)  An agreement by an attorney to draft a contract. 
D)  An agreement to paint a house. 
A)  An agreement to perform an operation. 
B)  A contract to paint a picture. 
C)  An agreement by an attorney to draft a contract. 
D)  An agreement to paint a house.

Question 12

Johann,a well-known musician,agrees to give ten guitar lessons to Elton for $2,000.Nothing in the contract itself prohibits a delegation.If Johann delegates his obligation to Eugene,a second-year musical student and enthusiastic guitar player,then the delegation will probably be:

Accepted Answer

A)  permitted because contracts may be freely delegated. 
B)  permitted because the contract is just for music lessons. 
C)  prohibited because Johann and Eugene have very different skill levels. 
D)  prohibited by the UCC. 
A)  permitted because contracts may be freely delegated. 
B)  permitted because the contract is just for music lessons. 
C)  prohibited because Johann and Eugene have very different skill levels. 
D)  prohibited by the UCC.

Question 13

A statute of limitations begins to run at the time of injury and will limit the time within which the injured party may file suit.

Accepted Answer

A) True 
 B)False

Question 14

Molly and Craig are the original parties to a contract.Craig is obligated to design a Website for Molly.They subsequently make an agreement with Eric that Eric should take the place of Craig and assume all of Craig's rights and duties under the contract.The agreement releases Craig from his obligations under the contract.This agreement is:

Accepted Answer

A)  a novation. 
B)  an accord and satisfaction. 
C)  an assignment. 
D)  a nullification. 
A)  a novation. 
B)  an accord and satisfaction. 
C)  an assignment. 
D)  a nullification.

Question 15

Wright Company contracted with the city of St.Louis to train and employ disadvantaged youths.If Wright fails to fulfill the contract and is sued by one of the disadvantaged youths,the youth would:

Accepted Answer

A)  win,as he is an intended beneficiary. 
B)  win,as he is a donor beneficiary. 
C)  lose,as he is a creditor beneficiary. 
D)  lose,as he is an incidental beneficiary. 
A)  win,as he is an intended beneficiary. 
B)  win,as he is a donor beneficiary. 
C)  lose,as he is a creditor beneficiary. 
D)  lose,as he is an incidental beneficiary.

Question 16

A nonparty to a contract may enforce the contract if the person is:

Accepted Answer

A)  a donee beneficiary. 
B)  an incidental beneficiary. 
C)  a creditor beneficiary. 
D)  Both a and c 
A)  a donee beneficiary. 
B)  an incidental beneficiary. 
C)  a creditor beneficiary. 
D)  Both a and c

Question 17

An assignment:

Accepted Answer

A)  is generally revocable if it is gratuitous and is either oral or written. 
B)  for consideration is irrevocable. 
C)  becomes valid when the obligor receives notice of the assignment. 
D)  must follow formalities. 
A)  is generally revocable if it is gratuitous and is either oral or written. 
B)  for consideration is irrevocable. 
C)  becomes valid when the obligor receives notice of the assignment. 
D)  must follow formalities.

Question 18

If Ray agrees to rake leaves for Michelle in exchange for Michelle's promise to pay off the debt Ray owes to Dean,then Dean is a donee beneficiary of the agreement between Ray and Michelle.

Accepted Answer

A) True 
 B)False

Question 19

Linda assigns to Ben a right to receive rent payments.The law implies the following warranty on Linda's part:

Accepted Answer

A)  the tenant is solvent. 
B)  Linda actually has a right to the rental payments. 
C)  the tenant will actually pay. 
D)  No warranties are implied by law in an assignment. 
A)  the tenant is solvent. 
B)  Linda actually has a right to the rental payments. 
C)  the tenant will actually pay. 
D)  No warranties are implied by law in an assignment.

Question 20

Brandon orally assigned his right to $100 to Will as a gift.This assignment is:

Accepted Answer

A)  not valid because it was not in writing. 
B)  valid even though it was oral and there was no consideration from Will. 
C)  irrevocable once Brandon has told Will about the gift. 
D)  not valid because Will gave no consideration for the assignment. 
A)  not valid because it was not in writing. 
B)  valid even though it was oral and there was no consideration from Will. 
C)  irrevocable once Brandon has told Will about the gift. 
D)  not valid because Will gave no consideration for the assignment.

Exam 11: Conclusion to Contracts

Expectation interest can best be described as money spent in reliance upon the agreement.

Susan took out a life insurance policy on herself,paying all of the premium payments.She named her daughter,Jessica,as the beneficiary under the policy.Jessica has not given anything in consideration for the policy.Jessica is:

A third party beneficiary's status occurs:

The first step a court takes in choosing a remedy is to determine:

An assignment is effective against the obligor from the moment it is made,regardless of whether the assignor notifies the obligor.

A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.This is:

Which of the following duties can probably be delegated?

Johann,a well-known musician,agrees to give ten guitar lessons to Elton for $2,000.Nothing in the contract itself prohibits a delegation.If Johann delegates his obligation to Eugene,a second-year musical student and enthusiastic guitar player,then the delegation will probably be:

A statute of limitations begins to run at the time of injury and will limit the time within which the injured party may file suit.

Wright Company contracted with the city of St.Louis to train and employ disadvantaged youths.If Wright fails to fulfill the contract and is sued by one of the disadvantaged youths,the youth would:

A nonparty to a contract may enforce the contract if the person is:

An assignment:

If Ray agrees to rake leaves for Michelle in exchange for Michelle's promise to pay off the debt Ray owes to Dean,then Dean is a donee beneficiary of the agreement between Ray and Michelle.

Linda assigns to Ben a right to receive rent payments.The law implies the following warranty on Linda's part:

Brandon orally assigned his right to $100 to Will as a gift.This assignment is:

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