Exam 15: Third-Party Rights and Discharge

Sprawlmaker,Inc.was a developer of shopping malls and other shopping centers.Sprawlmaker was developing a shopping mall in suburban Detroit.Sprawlmaker approached Cindy about the development of a strip mall across the street from this shopping mall.Cindy and Sprawlmaker reached an agreement where Sprawlmaker would construct the strip mall for Cindy.She would become the owner,and would lease it out to tenants.The mall was already under construction at this point.Because Cindy's project was much smaller and simpler,it was finished before the shopping mall.Cindy paid Sprawlmaker all amounts due under their contract.There began to be problems with the construction of the shopping mall.Eventually Sprawlmaker and the construction company building the mall stopped communicating and construction stopped.Meanwhile,Cindy was unable to secure leases for most of the space in her strip mall.Cindy wants to sue to recover for lost rent.Discuss Cindy's options and the likely outcome of a suit.

Which of the following is true about personal satisfaction clauses in contracts?

Husband buys an insurance policy with a face value of $100,000 and names his wife as sole beneficiary.When husband dies,the insurance company refuses to pay her the $100,000.Which of the following best describes this situation?

A contract for decorating someone's home that contains a personal satisfaction test would allow the homeowner to judge the satisfaction based on the homeowner's own personal tastes,so long as the homeowner acted in good faith.

Which of the following is true?

Amy agrees to build a barn for Sally.The contract provides that Sally must be "personally satisfied with the barn." If the barn is completed in a workmanlike manner,which of the following tests would be used to test Sally's satisfaction?

In a condition subsequent,the duty of performance is discharged upon the failure to meet a condition after the duty has already arisen.

Cathy signed a contract on July 1 with the local Ford dealer to purchase a Ford Venus for $18,000.This car was supposed to be delivered on August 5.On July 15,Cathy's grandmother unexpectedly died,and left approximately $50,000 to Cathy.Cathy's car had not arrived at the dealer by August 5.On August 7,she decides that with her inheritance she would prefer a nicer car.She goes to the dealer on August 8 and is told that her Venus will be in the next day.She tells the dealer that she is upset that the car is not in and that she would prefer a Ford Muskrat,which is a luxury model.She and the dealer agree on a price of $42,000 for a Muskrat to be delivered by September 15.By September 20,the Muskrat has not arrived.Cathy starts thinking that it would be wiser to use her grandmother's inheritance to purchase a house.She goes to the dealer and says that she does not want the Muskrat,and that she will take the Venus,which is still in inventory,for the $18,000 previously agreed to.Can Cathy get out of the contract to purchase the Muskrat? Can she force the dealer to sell her the Venus for $18,000?

The rule on delegation says that duties involving the exercise of personal skills or expertise cannot be assigned.Given this,how can accounting firms,law firms,and consulting firms delegate their work to subordinates? In the case of CPA firms,this is often to someone who is not yet even a CPA.Clients of these firms often get upset when they find out that someone at the firm other than the person they dealt with personally is doing the work on their matter.In one of these firms,how could you prevent clients from getting upset about this?

The City of Monroe enters into an oral contract with Allied Construction Co.to pave a gravel road.The gravel road passes in front of John's home.Once the road is paved,John's home would increase significantly in value.Allied fails to pave the gravel road.If John sued Allied for breach of contract,then which of the following is true?

Da Vinci,Jr.is hired to paint a portrait of a young woman.The contract calls for the young woman to pay $10,000 for the portrait.Da Vinci,Jr.is contemplating having one of his associates paint the portrait.Generally,what are the rules in such an agreement?

When there is a substituted contract,the discharge of the duties under the original contract occurs as soon as the substituted contract comes into existence.

Which of the following is true?

A third party who is not in privity of contract but who has rights under the contract and can enforce the contract against the obligor is said to be an intended beneficiary.

Which of the following types of third-party beneficiaries can acquire enforceable rights under the original contract?

Ralph Co.enters into an agreement to sell 500 computers to Buyer.Ralph decides that it cannot fulfill its contract so it transfers all its rights and duties under the contract to George Co.Which of the following is true?

Jerry Lee was a professional singer.He entered into a contract to sing at a concert sponsored by ABC Co.He also entered into a contract to sell his house to Mary.Before either contract could be performed,Jerry dies.Both ABC and Mary sue for breach of contract.What results?

Which of the following is true about third-party donee beneficiaries?

The transfer of rights under a contract to a third party is called:

Because of the uncertainty that they add to contracts,conditions must be express.