Question 1

Bill 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 2

The UCC imposes a writing requirement on all assignments of $500 or more.

Accepted Answer

A) True 
 B)False

Question 3

In a novation, the delegator is discharged and the third party becomes directly bound upon his promise to the obligee.

Accepted Answer

A) True 
 B)False

Question 4

A promisor may assert the defense of contractual modification or rescission, even if an intended beneficiary's rights
have vested.

Accepted Answer

A) True 
 B)False

Question 5

Assignment of rights is the voluntary transfer to a third party of the rights arising from a contract.

Accepted Answer

A) True 
 B)False

Question 6

Theresa 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, Stephanie, who is also a licensed teacher.The duties under the teaching contract:

Accepted Answer

A) are nondelegable. 
B) which Theresa has attempted to delegate are personal in nature. 
C) would no longer be required of Theresa if the school district agrees to accept Stephanie's services, because a novation would occur, which would relieve Theresa of her obligation to the school district. 
D) All of these are correct.

Question 7

Mr.Homayer hired Blake Painters to paint his house.Blake decides it has too many jobs and delegates the duties to the Andrews Company.Andrews does a poor job, and drips paint on the Homayers' flowers and windows.Mr.Homayer:

Accepted Answer

A) can sue both Blake and Andrews. 
B) can sue Blake, but he cannot sue Andrews. 
C) can sue Andrews, but he cannot sue Blake. 
D) cannot sue, because he has accepted the benefits of the assignment.

Question 8

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 9

When contract terms prohibiting the assignment of rights exist, most courts will:

Accepted Answer

A) strictly construe them. 
B) interpret a general term prohibiting assignments as rendering any assignment ineffective. 
C) award the obligor no right to damages for breach of a general term prohibiting assignments. 
D) All of these.

Question 10

Courts will enforce contracts for the benefit of all but which of the following?

Accepted Answer

A) Donee beneficiaries 
B) Creditor beneficiaries 
C) Incidental beneficiaries 
D) Intended beneficiaries

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Ron owes Lloyd $500 due March 1.Lloyd assigns his right to the money to Lou, but neither Lloyd nor Lou notifies Ron.On March 1, Ron pays Lloyd the $500.Ron is not discharged from his obligation, but is liable to Lou for the money.

Accepted Answer

A) True 
 B)False

Question 13

The general rule is that an assignee stands in the shoes of the assignor.He acquires the rights of the assignor but no new or additional rights.

Accepted Answer

A) True 
 B)False

Question 14

A(n) is a third party who obtains possible benefits but no rights under a contract.

Accepted Answer

A) incidental beneficiary 
B) intended beneficiary 
C) assignor 
D) donee beneficiary

Question 15

A contract 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) is called a third party beneficiary contract.

Accepted Answer

A) True 
 B)False

Question 16

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 17

Odessa owes Kevin $2,000.On July 1, Kevin assigns the right to the $2,000 to Troy.Thereafter, on July 15, Kevin assigns the same right to Donna, who in good faith gives value for it and knows nothing about the first assignee.In this case:

Accepted Answer

A) Troy has the right to the payment of $2,000. 
B) Donna has the right to the $2,000. 
C) neither Troy nor Donna can claim the $2,000. 
D) the rule differs in different states.Depending on which rule a state follows, the answer will vary.

Question 18

The UCC prohibits assignments of $5,000 or more.

Accepted Answer

A) True 
 B)False

Question 19

A creditor beneficiary is a type of incidental beneficiary.

Accepted Answer

A) True 
 B)False

Question 20

A promisor and a promisee may provide that the benefits under a contract will never vest in a third person.

Accepted Answer

A) True 
 B)False

Exam 16: Third Parties to Contracts

The UCC imposes a writing requirement on all assignments of $500 or more.

In a novation, the delegator is discharged and the third party becomes directly bound upon his promise to the obligee.

A promisor may assert the defense of contractual modification or rescission, even if an intended beneficiary's rights have vested.

Assignment of rights is the voluntary transfer to a third party of the rights arising from a contract.

Theresa 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, Stephanie, who is also a licensed teacher.The duties under the teaching contract:

Mr.Homayer hired Blake Painters to paint his house.Blake decides it has too many jobs and delegates the duties to the Andrews Company.Andrews does a poor job, and drips paint on the Homayers' flowers and windows.Mr.Homayer:

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:

When contract terms prohibiting the assignment of rights exist, most courts will:

Courts will enforce contracts for the benefit of all but which of the following?

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

Ron owes Lloyd $500 due March 1.Lloyd assigns his right to the money to Lou, but neither Lloyd nor Lou notifies Ron.On March 1, Ron pays Lloyd the $500.Ron is not discharged from his obligation, but is liable to Lou for the money.

The general rule is that an assignee stands in the shoes of the assignor.He acquires the rights of the assignor but no new or additional rights.

A(n) is a third party who obtains possible benefits but no rights under a contract.

A contract 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) is called a third party beneficiary contract.

Odessa owes Kevin $2,000.On July 1, Kevin assigns the right to the $2,000 to Troy.Thereafter, on July 15, Kevin assigns the same right to Donna, who in good faith gives value for it and knows nothing about the first assignee.In this case:

The UCC prohibits assignments of $5,000 or more.

A creditor beneficiary is a type of incidental beneficiary.

A promisor and a promisee may provide that the benefits under a contract will never vest in a third person.