Question 1

Explain the difference between negotiability and assignability.

Accepted Answer

Negotiable instruments are capable of be

Question 2

A stranger to a contract is the same as

Accepted Answer

A)  a promisor. 
B)  a third party. 
C)  a foreigner. 
D)  an intruder. 
E)  an outsider. 
A)  a promisor. 
B)  a third party. 
C)  a foreigner. 
D)  an intruder. 
E)  an outsider.

Question 3

An undisclosed principal is a contracting party who unknown to the other party is represented by an agent.

Accepted Answer

A) True 
 B)False

Question 4

Ordinarily, a debtor/promisor must consent to an assignment.

Accepted Answer

A) True 
 B)False

Question 5

Explain the concept of a chose in action.

Accepted Answer

A chose in action is a right t

Question 6

An implied contract that binds a party who made a representation or promise that induced a person to enter into a contract with another party is called,

Accepted Answer

A)  a collateral contract. 
B)  a unilateral contract. 
C)  privity of contract. 
D)  a secondary contract. 
E)  a bilateral contract. 
A)  a collateral contract. 
B)  a unilateral contract. 
C)  privity of contract. 
D)  a secondary contract. 
E)  a bilateral contract.

Question 7

In an assignment, the assignee takes subject to equities. Explain.

Accepted Answer

One of the fundamental rules is that an

Question 8

A person or entity that administers a trust is called

Accepted Answer

A)  a beneficiary. 
B)  a trust manager. 
C)  beneficial owner. 
D)  a trust administrator. 
E)  a trustee. 
A)  a beneficiary. 
B)  a trust manager. 
C)  beneficial owner. 
D)  a trust administrator. 
E)  a trustee.

Question 9

Mary wants to be able to take care of her sons when she is away. She decides to give an amount of money to a friend, Melanie, with the instructions that she is to use that money to care for the children when she is away. The money given to Melanie is called and Melanie is a .

Accepted Answer

A)  fund; trustee 
B)  trust; trustee 
C)  endowment; money caretaker 
D)  deposit; trustee 
E)  fund; constructive trust 
A)  fund; trustee 
B)  trust; trustee 
C)  endowment; money caretaker 
D)  deposit; trustee 
E)  fund; constructive trust

Question 10

The effect of the doctrine of privity of contract is that a unilateral contract is unenforceable against the promisee.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is true?

Accepted Answer

A)  A trustee is the legal owner of the property that he is administering. 
B)  The beneficiary of a trust cannot enforce the trust in his or her favour. 
C)  The legal owner of trust property is the true owner of the property. 
D)  A trustee is not the legal owner of the property that he is administering. 
E)  A constructive trust is a relationship that exists between a trustee and beneficiary. 
A)  A trustee is the legal owner of the property that he is administering. 
B)  The beneficiary of a trust cannot enforce the trust in his or her favour. 
C)  The legal owner of trust property is the true owner of the property. 
D)  A trustee is not the legal owner of the property that he is administering. 
E)  A constructive trust is a relationship that exists between a trustee and beneficiary.

Question 12

Which of the following situations does not involve a third party playing a role in a contract to which it is not a party?

Accepted Answer

A)  In a situation of vicarious performance when an employee carries out the duties of another. 
B)  In an assignment where rights of a party to a contract are assigned to a third party. 
C)  A novation when a third party becomes a substitute for one of the original parties. 
D)  In a tort situation where not only the retailer of a product, but the wholesaler of the product. 
E)  In an agency relationship where an agent makes an contract on behalf of an undisclosed principal. 
A)  In a situation of vicarious performance when an employee carries out the duties of another. 
B)  In an assignment where rights of a party to a contract are assigned to a third party. 
C)  A novation when a third party becomes a substitute for one of the original parties. 
D)  In a tort situation where not only the retailer of a product, but the wholesaler of the product. 
E)  In an agency relationship where an agent makes an contract on behalf of an undisclosed principal.

Question 13

Vicarious performance is where

Accepted Answer

A)  parties to a contract enter into another agreement which has the effect of transferring the liability to perform to a third party. 
B)  parties to a contract agree to terminate a contract and substitute a new contract in place of the old one. 
C)  an employer performs an obligation in place of its employee and is liable for proper performance. 
D)  a third party performs an obligation in place of another person who is ultimately liable for proper performance. 
E)  an employee performs an obligation in place of another employee and the performing employee is liable for proper performance. 
A)  parties to a contract enter into another agreement which has the effect of transferring the liability to perform to a third party. 
B)  parties to a contract agree to terminate a contract and substitute a new contract in place of the old one. 
C)  an employer performs an obligation in place of its employee and is liable for proper performance. 
D)  a third party performs an obligation in place of another person who is ultimately liable for proper performance. 
E)  an employee performs an obligation in place of another employee and the performing employee is liable for proper performance.

Question 14

An assignee of a contract takes the contract subject to equities. Explain the meaning of this phrase with the use of examples.

Accepted Answer

One of the fundamental rules is that an

Question 15

Explain the phrase "an assignee takes subject to equities."

Accepted Answer

One of the fundamental rules is that an

Question 16

A collateral contract is not an example of an exception to the privity of contract rule.

Accepted Answer

A) True 
 B)False

Question 17

Privity of contract is

Accepted Answer

A)  the relationship between the parties to a contract and a third party. 
B)  the consideration that a third party may bring to a contract. 
C)  the relationship that exists between a third party and one of the parties to a contract. 
D)  the relationship that exists between parties to a contract. 
E)  the liability of parties to a contract to a stranger or third party. 
A)  the relationship between the parties to a contract and a third party. 
B)  the consideration that a third party may bring to a contract. 
C)  the relationship that exists between a third party and one of the parties to a contract. 
D)  the relationship that exists between parties to a contract. 
E)  the liability of parties to a contract to a stranger or third party.

Question 18

Explain how a transferee of rights under a negotiable instrument may obtain greater rights against the maker of the instrument than an assignee of contractual rights might have against the debtor/promisor under an assignment.

Accepted Answer

Under an assignment of contractual right

Question 19

The effect of the doctrine of privity of contract is that

Accepted Answer

A)  parties to a contract are protected by the law. 
B)  a person can obtain rights under a contract to which he is not a party. 
C)  a bilateral contract is unenforceable against a promisee. 
D)  a person who is not a party to a contract cannot obtain benefits or rights under it. 
E)  a unilateral contract is unenforceable against parties who have privity. 
A)  parties to a contract are protected by the law. 
B)  a person can obtain rights under a contract to which he is not a party. 
C)  a bilateral contract is unenforceable against a promisee. 
D)  a person who is not a party to a contract cannot obtain benefits or rights under it. 
E)  a unilateral contract is unenforceable against parties who have privity.

Question 20

The legal owner of trust property is the true owner of the property.

Accepted Answer

A) True 
 B)False

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

Explain the difference between negotiability and assignability.

A stranger to a contract is the same as

An undisclosed principal is a contracting party who unknown to the other party is represented by an agent.

Ordinarily, a debtor/promisor must consent to an assignment.

Explain the concept of a chose in action.

An implied contract that binds a party who made a representation or promise that induced a person to enter into a contract with another party is called,

In an assignment, the assignee takes subject to equities. Explain.

A person or entity that administers a trust is called

Mary wants to be able to take care of her sons when she is away. She decides to give an amount of money to a friend, Melanie, with the instructions that she is to use that money to care for the children when she is away. The money given to Melanie is called and Melanie is a .

The effect of the doctrine of privity of contract is that a unilateral contract is unenforceable against the promisee.

Which of the following is true?

Which of the following situations does not involve a third party playing a role in a contract to which it is not a party?

Vicarious performance is where

An assignee of a contract takes the contract subject to equities. Explain the meaning of this phrase with the use of examples.

Explain the phrase "an assignee takes subject to equities."

A collateral contract is not an example of an exception to the privity of contract rule.

Privity of contract is

Explain how a transferee of rights under a negotiable instrument may obtain greater rights against the maker of the instrument than an assignee of contractual rights might have against the debtor/promisor under an assignment.

The effect of the doctrine of privity of contract is that

The legal owner of trust property is the true owner of the property.

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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