Exam 13: Third-Party Rights and Discharge

Which of the following statements is correct regarding anti-delegation clauses?

Herb and Henrietta live in a large city.Herb works as a supervisor at a local factory,and Henrietta has taught Latin for many years in the local high school.Their financial situation is fairly simple.They have a savings account,a small retirement plan,and they still own the first home that they bought as newlyweds.When they bought their current home they kept the first home and have used it as rental property.Herb and Henrietta are baffled by the entire concept of income taxes.The accountant who had prepared their taxes for many years died during the last year.Not knowing where to turn,they took their taxes to one of the large international CPA firms.The CPA firm accepted the work,with the parties agreeing that the fee for the tax return preparation would be $350.Most of this CPA firm's tax clients had far more complicated tax situations than that of Herb and Henrietta.The firm had a practice of contracting out the preparation of the simplest tax returns.Discuss the propriety of the CPA firm's actions.

An incidental beneficiary has ________ rights to enforce or sue under other people's contracts.

What is the defining characteristic of a donee third-party beneficiary?

An accord and satisfaction:

Which of the following is one of the primary types of contractual conditions?

The Restatement (Second)of Contracts eliminates the distinction between conditions precedent and conditions subsequent,and both are referred to as "conditions."

When the "personal satisfaction test" is used for determining a condition precedent of satisfaction,the person can reject the performance even if a reasonable person would accept it.

Incidental third-party beneficiaries may be classified as either donee or creditor beneficiaries.

In many cases,an incidental third-party beneficiary suffers a loss that can be directly traced to a party's breach of contract.Why are incidental third-party beneficiaries not able to recover their losses in such situations?

Whitney's beloved horse recently died.Whitney has entered into an agreement with a well-known sculptor to sculpt a life-size sculpture of the horse.This contract provides that Whitney is "not obligated to pay for the sculpture unless she is personally satisfied with the sculpture." In this situation:

Anti-assignment clauses are usually given legal effect.

An approval clause requires that the obligor approve any assignment of a contract.

Which of the following is one of the primary types of contractual conditions?

What is the legal effect of an obligor not being given notice of an assignment of rights under a contract?

When an assignor makes an assignment of a right under a contract,the assignee is under a duty to notify the obligor that 1)the assignment has been made and 2)performance must be rendered to the assignee.

What are the two general types of delegation of contractual duties?

A(n)________ assignment clause prohibits the assignment of rights under the contract.

Bob the dentist is having problems collecting amounts due from his patients.He sells and assigns the rights to these amounts,called accounts receivables,to Collect Company.Bob notifies the patients who owe money to pay Collect Company instead of him.Many patients,however,do not want to bother with Collect Company and continue to send payments to Bob.Unfortunately,Bob spends these amounts and ends up going bankrupt because of poor office practices and some dental malpractice claims.Collect Company sues the patients who paid Bob assigned amounts after they were notified of the assignment.Those patients say that they do not want to pay twice and that they already paid Bob.They say it is not their fault that he is a crummy dentist.Who is legally right?

An incidental third-party beneficiary can enforce the contract against the party who promised to render performance.