Question 1

Until the obligor has notice of assignment, the obligor can discharge his or her obligation by performance to any party.

Accepted Answer

A) True 
 B)False

Question 2

Jan is obligated under a contract to pay Katie $500. Katie assigns the right to receive the funds to Loren. If Jan does not pay the debt, the obligee can

Accepted Answer

A)  extinguish the contract rights of the obligor. 
B)  demand performance of the deal from any of the original parties. 
C)  enforce the payment in court. 
D)  none of the choices.

Question 3

The assignment of the same contract right to two different persons creates parallel and equal rights and obligations.

Accepted Answer

A) True 
 B)False

Question 4

The rights under an insurance policy can normally be assigned

Accepted Answer

A)  if the assignment involves only a payment of benefits. 
B)  if the assignment significantly changes the risk to the insurer. 
C)  if the assignment significantly alters the duties of the insurer. 
D)  under no circumstances.

Question 5

Harry assigns his rights under a contract with Irma to his college roommate, Jake. Neither Harry nor Jake notifies Irma of the assignment. The assignment

Accepted Answer

A)  will not be effective until notice is given to Irma. 
B)  will become effective after thirty days even if no notice is given to Irma. 
C)  is effective immediately. 
D)  is invalid.

Question 6

After a transfer to a creditor by an investor of a right to receive payments on a business loan, the creditor can demand those payments from the borrower.

Accepted Answer

A) True 
 B)False

Question 7

An insurance policy cannot be assigned if the assignment will significantly alter the risks to, or the duties of, the insurer.

Accepted Answer

A) True 
 B)False

Question 8

If it were not possible to assign contract rights, many businesses could not continue to operate.

Accepted Answer

A) True 
 B)False

Question 9

On a delegation of contract duties, the delegator is absolved from any liability for performance under the contract.

Accepted Answer

A) True 
 B)False

Question 10

Personal services are unique to the person rendering them, but the right to receive those services is not and can therefore be assigned.

Accepted Answer

A) True 
 B)False

Question 11

Apps LLC enters into a contract with Birk, the chief executive officer of Corporate Sales Inc., to create an app for the firm. To fulfill the contract, Apps hires Dave as a student intern. With respect to the app contract, Dave is

Accepted Answer

A)  an intended beneficiary. 
B)  an incidental beneficiary. 
C)  a promisee. 
D)  a promisor.

Question 12

An obligee can legally refuse performance from a delegatee only if the duty delegated is one that cannot be delegated.

Accepted Answer

A) True 
 B)False

Question 13

In a state in which a statute prohibits an employee from assigning the right to receive workers' compensation benefits, the employee can assign the right

Accepted Answer

A)  if all interested parties consent. 
B)  if the employee is fully advised of his or her rights. 
C)  if there is no significant change to the obligor's risk or duties. 
D)  under no circumstances.

Question 14

For a price, Evan agrees to empty the dumpster behind Fast Food Diner. Evan delegates this duty to Gus, who then owes performance of the duty to the diner. The diner is

Accepted Answer

A)  the obligor. 
B)  a third party beneficiary. 
C)  the obligee. 
D)  the delegatee.

Question 15

An incidental third party beneficiary cannot sue to enforce the contract because the benefit is unintentional.

Accepted Answer

A) True 
 B)False

Question 16

The unconditional assignment of rights under a contract extinguishes the rights of the assignee.

Accepted Answer

A) True 
 B)False

Question 17

Beto contracts to design and deliver marketing materials to Cesar. Beto cannot delegate this duty to Devon

Accepted Answer

A)  if performance depends on Beto's personal skill. 
B)  if the delegatee's performance will match the obligee's expectations. 
C)  if special trust has not been placed in the obligor. 
D)  under any circumstances.

Question 18

Jim and Kelly agree that Jim will fix the refrigeration unit in Kelly's Lunch Café in exchange for her payment of a debt that Jim owes to Money Corporation. Under this contract, the intended beneficiary is

Accepted Answer

A)  Kelly. 
B)  Money. 
C)  Jim. 
D)  any customer, client, or employee of Lunch or Money.

Question 19

Lance enters into a contract to mow Mary's yard every week for the summer. Mary sells her house and yard to Nora, and assigns the right to receive Lance's services to Nora. Mary is

Accepted Answer

A)  the obligor. 
B)  a third party beneficiary. 
C)  the assignee. 
D)  the assignor.

Question 20

Rendering contract performance directly to a third party does not indicate whether that party is an incidental or an intended beneficiary.

Accepted Answer

A) True 
 B)False

Exam 18: Third Party Rights

Until the obligor has notice of assignment, the obligor can discharge his or her obligation by performance to any party.

Jan is obligated under a contract to pay Katie $500. Katie assigns the right to receive the funds to Loren. If Jan does not pay the debt, the obligee can

The assignment of the same contract right to two different persons creates parallel and equal rights and obligations.

The rights under an insurance policy can normally be assigned

Harry assigns his rights under a contract with Irma to his college roommate, Jake. Neither Harry nor Jake notifies Irma of the assignment. The assignment

After a transfer to a creditor by an investor of a right to receive payments on a business loan, the creditor can demand those payments from the borrower.

An insurance policy cannot be assigned if the assignment will significantly alter the risks to, or the duties of, the insurer.

If it were not possible to assign contract rights, many businesses could not continue to operate.

On a delegation of contract duties, the delegator is absolved from any liability for performance under the contract.

Personal services are unique to the person rendering them, but the right to receive those services is not and can therefore be assigned.

Apps LLC enters into a contract with Birk, the chief executive officer of Corporate Sales Inc., to create an app for the firm. To fulfill the contract, Apps hires Dave as a student intern. With respect to the app contract, Dave is

An obligee can legally refuse performance from a delegatee only if the duty delegated is one that cannot be delegated.

In a state in which a statute prohibits an employee from assigning the right to receive workers' compensation benefits, the employee can assign the right

For a price, Evan agrees to empty the dumpster behind Fast Food Diner. Evan delegates this duty to Gus, who then owes performance of the duty to the diner. The diner is

An incidental third party beneficiary cannot sue to enforce the contract because the benefit is unintentional.

The unconditional assignment of rights under a contract extinguishes the rights of the assignee.

Beto contracts to design and deliver marketing materials to Cesar. Beto cannot delegate this duty to Devon

Jim and Kelly agree that Jim will fix the refrigeration unit in Kelly's Lunch Café in exchange for her payment of a debt that Jim owes to Money Corporation. Under this contract, the intended beneficiary is

Lance enters into a contract to mow Mary's yard every week for the summer. Mary sells her house and yard to Nora, and assigns the right to receive Lance's services to Nora. Mary is

Rendering contract performance directly to a third party does not indicate whether that party is an incidental or an intended beneficiary.