Question 1

Leon contracts to install automatic watering troughs in Kendall's dairy barn. When Leon becomes seriously ill,he contracts with Jake to install the troughs. Jake is unreliable and never shows up to do the work. Kendall can sue

Accepted Answer

A) no one. 
B) Jake only. 
C) Leon only. 
D) Jake or Leon.

Question 2

Privity of contract establishes the basic concept that third parties have no rights in contracts to which they are not parties.

Accepted Answer

A) True 
 B)False

Question 3

Marco and Fred enter into a contract for the sale of Marco's apartment for which Fred agrees to pay him $100,000. Marco cannot prohibit Fred from transferring his right to the ownership of the apartment because such a prohibition is

Accepted Answer

A) against public policy. 
B) immoral. 
C) unconscionable. 
D) a crime.

Question 4

Ben and Ivy enter into a contract under which Ben agrees to cater Ivy's wedding in exchange for a cash down payment. The contract expressly prohibits any transfer of rights. A contract right may be transferred,however,if the transfer involves

Accepted Answer

A) a right to receive payment. 
B) a right to Ben's services. 
C) rights under Ivy's insurance policy against Ben's failing to perform. 
D) a right whose transfer is otherwise expressly prohibited by statute.

Question 5

All that a delegator needs to do to make a delegation effective is to express an intention to make the delegation.

Accepted Answer

A) True 
 B)False

Question 6

Regional Steel,Inc.,and Overland Transport Company enter into a con-tract. Smooth Oil Corporation,which will indirectly benefit from the deal,is prevented from having rights under the contract by the principle of

Accepted Answer

A) assignment. 
B) delegation. 
C) privity. 
D) vesting.

Question 7

Revenue & Sales Corporation and Software Solutions,Inc.,enter into a contract for the design of custom software for which Revenue & Sales agrees to pay $4,500. Software Solutions transfers the right to payment under the contract to Creditline Company. Creditline is

Accepted Answer

A) an assignor. 
B) an assignee. 
C) anobligee. 
D) a delegatee.

Question 8

There are no exceptions to the rule that any duty can be delegated.

Accepted Answer

A) True 
 B)False

Question 9

Eli owes Martin $10,000. Martin assigns the claim to Jack. Jack does not notify Eli of the assignment. A week later,Martin assigns the same claim to Allen. Allen immediately notifies Eli of the assignment. Allen

Accepted Answer

A) has priority to payment in all states. 
B) has priority to payment in states that follow the English rule. 
C) does not have priority to payment in any state. 
D) haspriority to payment in most states.

Question 10

Laramie contracts to provide cattle-herding services to Miles for $1,400 per month. Laramie cannot transfer this duty

Accepted Answer

A) under any circumstances. 
B) without continuing to be potentially liable. 
C) without Miles's consent. 
D) without paying Miles at least one monthly fee.

Question 11

A donee beneficiaryis any third person who receives a benefit from a contract even though that person's benefit is not the reason the contract was made.

Accepted Answer

A) True 
 B)False

Question 12

An assignee has a right to demand performance from the obligor.

Accepted Answer

A) True 
 B)False

Question 13

Richly Retail Outlets,Inc.,contracts with Stand-Rite Contractors to build a store. Stand-Rite assigns the contract to Town Builders,which has a poor record of completing projects. Richly could most successfully argue that the contract cannot be assigned because

Accepted Answer

A) Richly did not consent to the assignment. 
B) Richly did not receive adequate consideration for the assignment. 
C) the assignment will materially increase the risk of nonperformance. 
D) Town Builders was not an original party to the deal.

Question 14

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 15

As long as a contract is personal in nature,all rights under the contract can be assigned.

Accepted Answer

A) True 
 B)False

Question 16

Dyantakes out an insurance policy on her car. Dyan can assign her policy to a third party

Accepted Answer

A) under any circumstances. 
B) underno circumstances. 
C) as long as she does so in writing. 
D) if a court approves the assignment.

Question 17

If a contract requires that performance be rendered directly to a third party,the third party is an intended beneficiary.

Accepted Answer

A) True 
 B)False

Question 18

Giving notice is legally necessary to establish the validity of an assignment.

Accepted Answer

A) True 
 B)False

Question 19

Rights to receive funds can be assigned.

Accepted Answer

A) True 
 B)False

Question 20

Bea takes out a life insurance policy with Vida Insurance Corporation that names her spouse Wendell as the beneficiary. This is

Accepted Answer

A) a delegation. 
B) an assignment. 
C) a third party incidental beneficiary contract. 
D) a third party intended beneficiary contract.

Exam 18: Third Party Rights

Leon contracts to install automatic watering troughs in Kendall's dairy barn. When Leon becomes seriously ill,he contracts with Jake to install the troughs. Jake is unreliable and never shows up to do the work. Kendall can sue

Privity of contract establishes the basic concept that third parties have no rights in contracts to which they are not parties.

Marco and Fred enter into a contract for the sale of Marco's apartment for which Fred agrees to pay him $100,000. Marco cannot prohibit Fred from transferring his right to the ownership of the apartment because such a prohibition is

Ben and Ivy enter into a contract under which Ben agrees to cater Ivy's wedding in exchange for a cash down payment. The contract expressly prohibits any transfer of rights. A contract right may be transferred,however,if the transfer involves

All that a delegator needs to do to make a delegation effective is to express an intention to make the delegation.

Regional Steel,Inc.,and Overland Transport Company enter into a con-tract. Smooth Oil Corporation,which will indirectly benefit from the deal,is prevented from having rights under the contract by the principle of

Revenue & Sales Corporation and Software Solutions,Inc.,enter into a contract for the design of custom software for which Revenue & Sales agrees to pay $4,500. Software Solutions transfers the right to payment under the contract to Creditline Company. Creditline is

There are no exceptions to the rule that any duty can be delegated.

Eli owes Martin $10,000. Martin assigns the claim to Jack. Jack does not notify Eli of the assignment. A week later,Martin assigns the same claim to Allen. Allen immediately notifies Eli of the assignment. Allen

Laramie contracts to provide cattle-herding services to Miles for $1,400 per month. Laramie cannot transfer this duty

A donee beneficiaryis any third person who receives a benefit from a contract even though that person's benefit is not the reason the contract was made.

An assignee has a right to demand performance from the obligor.

Richly Retail Outlets,Inc.,contracts with Stand-Rite Contractors to build a store. Stand-Rite assigns the contract to Town Builders,which has a poor record of completing projects. Richly could most successfully argue that the contract cannot be assigned because

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

As long as a contract is personal in nature,all rights under the contract can be assigned.

Dyantakes out an insurance policy on her car. Dyan can assign her policy to a third party

If a contract requires that performance be rendered directly to a third party,the third party is an intended beneficiary.

Giving notice is legally necessary to establish the validity of an assignment.

Rights to receive funds can be assigned.

Bea takes out a life insurance policy with Vida Insurance Corporation that names her spouse Wendell as the beneficiary. This is