Question 1

Arthur enters into a contract with Brennon as a result of Brennon's fraud in the inducement.Under the contract,Brennon has the right to the payment of $100.Brennon assigns the right to the $100 to Carl.Arthur may assert the defense of fraud in the inducement to avoid paying Carl the $100.

Accepted Answer

A) True 
 B)False  True

Question 2

A party beneficiary contract is one in which a party (the promisor)promises to render a certain performance not to the other party (the promisee)but to a third person (the beneficiary).

Accepted Answer

A) True 
 B)False  True

Question 3

Betty owes Agatha $1,000.On March 1 Agatha,for value,assigned the debt to Clara.Thereafter,on March 30,Agatha assigned the same right to Diane.Under the:

Accepted Answer

A)   American rule,Clara will prevail over Diane.
B)   American rule,the first assignee to notify Betty will prevail.
C)   Restatement rule,the first assignee to notify Betty will prevail.
D)   English rule,Clara will prevail over Diane. A

Question 4

A gratuitous assignment is generally valid and enforceable.

Accepted Answer

A) True 
 B)False

Question 5

The UCC permits a buyer under a contract of sale to agree as part of the contract that he will not assert against an assignee any claim or defense that the buyer may have against the seller under certain circumstances.Identify these circumstances,and discuss the reason the UCC permits such a provision and how the FTC deals with such waiver of defense provisions.

Accepted Answer

The answer of The UCC permits a buyer under a...

Question 6

Teresa has a contract to teach eighth grade at Washington Middle School.She decided she could make more money writing a book,so she assigns her teaching contract to her friend,Shirley,who is also a licensed teacher.The duties under the teaching contract:

Accepted Answer

A)   are nondelegable.
B)   are personal in nature.
C)   would no longer be required of Teresa if the school district agrees to accept Shirley's services,because a novation would occur.
D)   All of these are correct.

Question 7

A valid assignment requires that notice be given to the obligor.

Accepted Answer

A) True 
 B)False

Question 8

When the assignee gives consideration in exchange for an assignment,there is a contract between the assignor and the assignee that prevents the assignor from revoking the assignment without the assent of the assignee.

Accepted Answer

A) True 
 B)False

Question 9

Noel and Lyle have a contract whereby Noel is to perform routine construction services according to the blueprints that Lyle has provided.Noel assigns the contract to David.As a result of this assignment:

Accepted Answer

A)   Lyle can bring suit based upon detrimental reliance.
B)   Noel has no more rights or responsibilities with regard to the contract.
C)   Noel no longer has any rights under the contract,but he remains responsible for the duties he agreed to perform.
D)   Noel has all of his rights under the contract,but he has no responsibility for the performance of the duties.

Question 10

Leighton wants to buy a new car.He goes to the bank to get a loan for the purchase,and signs an agreement to pay $10.00 per month in premiums on a term life insurance policy which names the bank as the recipient of the policy proceeds in the event of his death before the loan is repaid.The bank is a(n):

Accepted Answer

A)   incidental beneficiary.
B)   creditor beneficiary.
C)   donee beneficiary.
D)   assignee.

Question 11

A(n)____ is a method of discharging a contract in which a third party becomes bound upon a promise to the obligee.

Accepted Answer

A)   assignment
B)   delegation
C)   partial assignment
D)   novation

Question 12

Which of the following involves a creditor beneficiary relationship?

Accepted Answer

A)   A contract where the insured names a bank with which he has a loan as the beneficiary of a life insurance policy
B)   A contract between an employer and a union representing the employees,which contract is made for the benefit of the employees
C)   A contract between the owner of a building and the contractor stating that the contractor will pay his employees at a stated rate
D)   A contract between a governmental unit and business for services to be rendered to area citizens

Question 13

The student government of State University has a contract with a famous rock band to perform at the university on homecoming weekend.The band cannot assign its rights and delegate its duties under this contract.

Accepted Answer

A) True 
 B)False

Question 14

In an assignment or delegation,the third parties' rights or duties arise after the contract is made.

Accepted Answer

A) True 
 B)False

Question 15

A partial assignment is a transfer of a portion of the contractual rights to one or more assignees.

Accepted Answer

A) True 
 B)False

Question 16

Contractual duties are assignable.

Accepted Answer

A) True 
 B)False

Question 17

Walter has a contract with a Speed-E Painters to paint his house.When he realizes that he will have some unexpected medical expenses,he calls the Speed-E Painters to cancel the contract.Walter's next door neighbor can sue Walter to enforce the contract,because if Walter improves his own property,his neighbor's property will also be worth more money.

Accepted Answer

A) True 
 B)False

Question 18

In some states,the vesting of a third party's rights occurs only when the third party learns of the contract and assents to it.

Accepted Answer

A) True 
 B)False

Question 19

Zoe enters into a contract with a contractor to build a large apartment complex in Lake City.Donner will benefit from this contract since his restaurant is adjacent to the planned complex.Donner in this instance is a(n):

Accepted Answer

A)   implied beneficiary.
B)   partial beneficiary.
C)   donee beneficiary.
D)   incidental beneficiary.

Question 20

The Restatement and Article 2 of the Code provide that,unless circumstances indicate the contrary,a contract term that prohibits the assignment of a contract bars only the delegation to the assignee of the assignor's duty of performance and does not bar the assignment of contract rights.

Accepted Answer

A) True 
 B)False

Exam 16: Third Parties to Contracts

Arthur enters into a contract with Brennon as a result of Brennon's fraud in the inducement.Under the contract,Brennon has the right to the payment of $100.Brennon assigns the right to the $100 to Carl.Arthur may assert the defense of fraud in the inducement to avoid paying Carl the $100.

A party beneficiary contract is one in which a party (the promisor)promises to render a certain performance not to the other party (the promisee)but to a third person (the beneficiary).

Betty owes Agatha $1,000.On March 1 Agatha,for value,assigned the debt to Clara.Thereafter,on March 30,Agatha assigned the same right to Diane.Under the:

A gratuitous assignment is generally valid and enforceable.

Teresa has a contract to teach eighth grade at Washington Middle School.She decided she could make more money writing a book,so she assigns her teaching contract to her friend,Shirley,who is also a licensed teacher.The duties under the teaching contract:

A valid assignment requires that notice be given to the obligor.

When the assignee gives consideration in exchange for an assignment,there is a contract between the assignor and the assignee that prevents the assignor from revoking the assignment without the assent of the assignee.

Noel and Lyle have a contract whereby Noel is to perform routine construction services according to the blueprints that Lyle has provided.Noel assigns the contract to David.As a result of this assignment:

A(n) ____ is a method of discharging a contract in which a third party becomes bound upon a promise to the obligee.

Which of the following involves a creditor beneficiary relationship?

The student government of State University has a contract with a famous rock band to perform at the university on homecoming weekend.The band cannot assign its rights and delegate its duties under this contract.

In an assignment or delegation,the third parties' rights or duties arise after the contract is made.

A partial assignment is a transfer of a portion of the contractual rights to one or more assignees.

Contractual duties are assignable.

In some states,the vesting of a third party's rights occurs only when the third party learns of the contract and assents to it.

Zoe enters into a contract with a contractor to build a large apartment complex in Lake City.Donner will benefit from this contract since his restaurant is adjacent to the planned complex.Donner in this instance is a(n) :

The Restatement and Article 2 of the Code provide that,unless circumstances indicate the contrary,a contract term that prohibits the assignment of a contract bars only the delegation to the assignee of the assignor's duty of performance and does not bar the assignment of contract rights.