Question 1

Novation occurs when

Accepted Answer

A)  one of the parties to the contract ends the contract. 
B)  both parties to the contract assign their obligations to a third party. 
C)  one of the parties to the contract assigns his or her obligations to a third party. 
D)  the parties to a contract agree to terminate the contract and substitute a new contract. 
E)  both parties to the contract agree to terminate the contract because of circumstances beyond their control. 
A)  one of the parties to the contract ends the contract. 
B)  both parties to the contract assign their obligations to a third party. 
C)  one of the parties to the contract assigns his or her obligations to a third party. 
D)  the parties to a contract agree to terminate the contract and substitute a new contract. 
E)  both parties to the contract agree to terminate the contract because of circumstances beyond their control. D

Question 2

What is vicarious performance? What types of contracts cannot be vicariously performed?

Accepted Answer

Generally, a promisor cannot escape his liability by substituting someone for himself without the consent of the promisee. Vicarious performance occurs when a third party performs on behalf of the promisor who remains responsible for proper performance. As a general rule, vicarious performance is not possible in personal contracts, that is where the personal performance by the promisor is the reason why the promisee entered into a contract. An example of a personal contract where vicarious performance is not possible is a piano recital where the reason for the promisee entering into a contract with the promisor is to hear that particular pianist, and not a substitute, play.

Question 3

Liabilities may be assigned to a third party.

Accepted Answer

A) True 
 B)False  False

Question 4

A person who assigns his right of payment to a third party is

Accepted Answer

A)  the bankrupt. 
B)  the assignor or the promisee. 
C)  the assignee. 
D)  the trustee. 
E)  the promisor. 
A)  the bankrupt. 
B)  the assignor or the promisee. 
C)  the assignee. 
D)  the trustee. 
E)  the promisor.

Question 5

Once created a trust cannot be revoked by the persons who created it without the consent of the beneficiary.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a trust arrangement?

Accepted Answer

A)  A corporation transferring the title to fixed assets to a trustee for bondholders as security for the payment of the bonds. 
B)  A mother transferring assets to provide for her infant should she pass away. 
C)  Your broker requiring sufficient funds in your account to cover a deficit. 
D)  Property of a bankrupt being transferred to a trustee. 
E)  Parents setting up a fund for the education of their children. 
A)  A corporation transferring the title to fixed assets to a trustee for bondholders as security for the payment of the bonds. 
B)  A mother transferring assets to provide for her infant should she pass away. 
C)  Your broker requiring sufficient funds in your account to cover a deficit. 
D)  Property of a bankrupt being transferred to a trustee. 
E)  Parents setting up a fund for the education of their children.

Question 7

Who is a holder in the law on negotiable instruments?

Accepted Answer

A holder is a party

Question 8

As a general rule regarding assignments, one may assign _ to a third party.

Accepted Answer

A)  obligations but not benefits 
B)  rights and liabilities 
C)  rights but not liabilities 
D)  liabilities but not rights 
E)  obligations and benefits 
A)  obligations but not benefits 
B)  rights and liabilities 
C)  rights but not liabilities 
D)  liabilities but not rights 
E)  obligations and benefits

Question 9

How has the privity of contract rule been modified with respect to insurance?

Accepted Answer

The privity of contract rule means that

Question 10

Landlord and Tenant entered into a 5- year lease. One year later, Landlord sold the premises to Purchaser. Purchaser is bound by the lease.

Accepted Answer

A) True 
 B)False

Question 11

A trustee is the legal owner of the property that he is administering.

Accepted Answer

A) True 
 B)False

Question 12

Vicarious performance is not allowed when

Accepted Answer

A)  the third party has no interest in the contract. 
B)  personal performance is required under the contract. 
C)  the parties to a contract are related to the third party who is supposed to perform the contract.. 
D)  the relationship between the parties is not that of employer and employee. 
E)  the third party supposed to perform the contract has an interest in the contract. 
A)  the third party has no interest in the contract. 
B)  personal performance is required under the contract. 
C)  the parties to a contract are related to the third party who is supposed to perform the contract.. 
D)  the relationship between the parties is not that of employer and employee. 
E)  the third party supposed to perform the contract has an interest in the contract.

Question 13

Landlord and Tenant entered into a 5- year lease. One year after the lease began, Tenant assigned its rights under the lease to Assignee. Two years after taking possession of the premises, Assignee stopped paying rent to Landlord. In order to recover rent due, Landlord has a right to sue:

Accepted Answer

A)  Tenant, but only if at the time of the assignment, Tenant agreed to be bound. 
B)  Assignee 
C)  Tenant 
D)  Assignee and Tenant 
E)  Tenant only if Assignee is bankrupt 
A)  Tenant, but only if at the time of the assignment, Tenant agreed to be bound. 
B)  Assignee 
C)  Tenant 
D)  Assignee and Tenant 
E)  Tenant only if Assignee is bankrupt

Question 14

A person who, although not the legal owner, may compel the trustee to provide benefits of a trust to him is called the

Accepted Answer

A)  secondary beneficiary. 
B)  beneficial owner. 
C)  beneficiary. 
D)  trustee. 
E)  trust benefactor. 
A)  secondary beneficiary. 
B)  beneficial owner. 
C)  beneficiary. 
D)  trustee. 
E)  trust benefactor.

Question 15

What is a statutory assignment?

Accepted Answer

A statutory assignment is one

Question 16

Who is an assignor?

Accepted Answer

A party that assigns

Question 17

The right to intangible property is known as

Accepted Answer

A)  a chose of property. 
B)  equitable assignment of property. 
C)  a chose in possession. 
D)  intangible property right. 
E)  a chose in action. 
A)  a chose of property. 
B)  equitable assignment of property. 
C)  a chose in possession. 
D)  intangible property right. 
E)  a chose in action.

Question 18

A novation occurs when two parties agree to terminate a contract and substitute a new contract.

Accepted Answer

A) True 
 B)False

Question 19

Who is an assignee?

Accepted Answer

An assignee is a third party t

Question 20

A negotiable instrument is

Accepted Answer

A)  valuable documents that can be pledged as security to another. 
B)  a written promise by a party given in exchange for a promise of another. 
C)  an instrument that is used in negotiations. 
D)  an instrument that can be given in exchange for a promise of another. 
E)  a written contract containing a promise, express or implied, to pay a specific sum of money to the order of a designated person or to bearer. 
A)  valuable documents that can be pledged as security to another. 
B)  a written promise by a party given in exchange for a promise of another. 
C)  an instrument that is used in negotiations. 
D)  an instrument that can be given in exchange for a promise of another. 
E)  a written contract containing a promise, express or implied, to pay a specific sum of money to the order of a designated person or to bearer.

Exam 12: Privity of Contract and the Assignment of Contractual Rights

Novation occurs when

What is vicarious performance? What types of contracts cannot be vicariously performed?

Liabilities may be assigned to a third party.

A person who assigns his right of payment to a third party is

Once created a trust cannot be revoked by the persons who created it without the consent of the beneficiary.

Which of the following is not a trust arrangement?

Who is a holder in the law on negotiable instruments?

As a general rule regarding assignments, one may assign _ to a third party.

How has the privity of contract rule been modified with respect to insurance?

Landlord and Tenant entered into a 5- year lease. One year later, Landlord sold the premises to Purchaser. Purchaser is bound by the lease.

A trustee is the legal owner of the property that he is administering.

Vicarious performance is not allowed when

Landlord and Tenant entered into a 5- year lease. One year after the lease began, Tenant assigned its rights under the lease to Assignee. Two years after taking possession of the premises, Assignee stopped paying rent to Landlord. In order to recover rent due, Landlord has a right to sue:

A person who, although not the legal owner, may compel the trustee to provide benefits of a trust to him is called the

What is a statutory assignment?

Who is an assignor?

The right to intangible property is known as

A novation occurs when two parties agree to terminate a contract and substitute a new contract.

Who is an assignee?

A negotiable instrument is

Law and Society

The Machinery of Justice

The Law of Torts

Professional Liability

Formation of a Contract: Offer and Acceptance

Formation of a Contract: Consideration, and Intention to Create Legal Relations

Formation of a Contract: Capacity to Contract and Legality of Object

Grounds Upon Which a Contract May Be Impeached: Mistake

Grounds Upon Which a Contract May Be Impeached: Misrepresentation, Undue Influence, and Duress

The Requirement of Writing

The Interpretation of Contracts

The Discharge of Contracts

The Effect of Breach

Remedies for Breach

Sale of Goods

Leasing and Bailment

Insurance and Guarantee

Agency and Franchising

The Contract of Employment

Negotiable Instruments

Intellectual Property

Interests in Land and Their Transfer

Landlord and Tenant

Mortgages of Land and Real Estate Transactions

Sole Proprietorships and Partnerships

The Nature of a Corporation and Its Formation

The Internal Affairs of Corporations

The External Responsibilities of a Corporation

Secured Transactions

Creditors Rights

Government Regulation of Business

International Business Transactions

Electronic Commerce

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