Question 1

When is an assignment valid and enforceable against an obligor?

Accepted Answer

A) from the moment the assignment it is made 
B) from the moment the obligor signs the contract 
C) from the moment the assignee gives consideration 
D) from the moment the obligor is notified of the assignment 
A) from the moment the assignment it is made 
B) from the moment the obligor signs the contract 
C) from the moment the assignee gives consideration 
D) from the moment the obligor is notified of the assignment

Question 2

Kirk purchases a sailboat on credit from Lakefront Sales,and Lakefront keeps a security interest in the boat.Lakefront then assigns the security interest to First Finance Co.Explain what having a security interest means.Under the UCC,what defenses can Kirk assert against First Finance?

Accepted Answer

A security interest is a legal right in

Question 3

A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.This is

Accepted Answer

A) a valid assignment because of the rule of freedom to contract. 
B) a valid assignment because this is a simple transfer of the right to receive money. 
C) an invalid assignment because it increases the burden of the payor. 
D) an invalid assignment because this is a personal service contract. 
A) a valid assignment because of the rule of freedom to contract. 
B) a valid assignment because this is a simple transfer of the right to receive money. 
C) an invalid assignment because it increases the burden of the payor. 
D) an invalid assignment because this is a personal service contract.

Question 4

An assignment is valid from the moment it is made,regardless of whether the assignor notifies the obligor.

Accepted Answer

A) True 
 B)False

Question 5

Norm and Frank have a legal contract that is silent with regard to an assignment of the contract.In order for Norm to assign all or part of his rights under a contract,Frank must grant such permission to Norm.

Accepted Answer

A) True 
 B)False

Question 6

Jerry purchased a laptop computer for his personal use from Computer City on an installment loan contract.The sales contract stated that in the event the contract is assigned to a third party,the purchaser (Jerry)promises he will not assert any claim or defense against the assignee which he might have against Computer City.Computer City immediately assigns the contract rights to Finance USA.The computer stops working within two weeks of the purchase.

Accepted Answer

A) This is a valid waiver of defense clause.Jerry signed the contract, so he can't raise a defense to Finance USA. 
B) Finance USA is an intended third party beneficiary and may therefore enforce the contract. 
C) In general, this type of waiver is not permitted in consumer contracts, so Jerry can raise his claim against Finance USA. 
D) This is a delegation of Jerry's duties and the delegator remains liable on the contract unless a novation agreement is made. 
A) This is a valid waiver of defense clause.Jerry signed the contract, so he can't raise a defense to Finance USA. 
B) Finance USA is an intended third party beneficiary and may therefore enforce the contract. 
C) In general, this type of waiver is not permitted in consumer contracts, so Jerry can raise his claim against Finance USA. 
D) This is a delegation of Jerry's duties and the delegator remains liable on the contract unless a novation agreement is made.

Question 7

Which of the following duties can probably be delegated?

Accepted Answer

A) An agreement to perform an operation 
B) A contract to paint a picture 
C) An agreement by an attorney to draft a contract 
D) An agreement to paint a house 
A) An agreement to perform an operation 
B) A contract to paint a picture 
C) An agreement by an attorney to draft a contract 
D) An agreement to paint a house

Question 8

The status of a third party is determined by

Accepted Answer

A) the type of contract. 
B) whether the third party gave consideration. 
C) the reasonable expectations of the third party. 
D) the intent of the contracting parties. 
A) the type of contract. 
B) whether the third party gave consideration. 
C) the reasonable expectations of the third party. 
D) the intent of the contracting parties.

Question 9

Robert hired James,a CPA,to prepare his tax returns.James was too busy and delegated the work to Sara,also a CPA.This delegation is

Accepted Answer

A) enforceable, as Sara is also a CPA. 
B) enforceable, as there was no expectation James would do the work. 
C) not enforceable, as Robert hired James to perform personal services. 
D) not enforceable, as this violates public policy. 
A) enforceable, as Sara is also a CPA. 
B) enforceable, as there was no expectation James would do the work. 
C) not enforceable, as Robert hired James to perform personal services. 
D) not enforceable, as this violates public policy.

Question 10

Someone who might have benefited from a contract between two others but has no right to enforce that agreement is

Accepted Answer

A) a donee beneficiary. 
B) an incidental beneficiary. 
C) a creditor beneficiary. 
D) contractual beneficiary. 
A) a donee beneficiary. 
B) an incidental beneficiary. 
C) a creditor beneficiary. 
D) contractual beneficiary.

Question 11

Ted and Alice own their recreational vehicle subject to a security agreement to Third U.S.Bank to secure the repayment of the purchase money loan.Ted and Alice sell their RV to Bob and Carol,who agree to take over the loan payments to the bank.There is no novation with the bank.Under these facts,if Bob and Carol do not make the loan payments,Third U.S.Bank

Accepted Answer

A) can sue Bob and Carol only. 
B) can sue Ted and Alice only. 
C) can sue Bob, Carol, Ted, and Alice. 
D) cannot sue anyone but can repossess the RV. 
A) can sue Bob and Carol only. 
B) can sue Ted and Alice only. 
C) can sue Bob, Carol, Ted, and Alice. 
D) cannot sue anyone but can repossess the RV.

Question 12

Briefly discuss the enforceability of contracts by third parties.

Accepted Answer

Contracts can be enforced by third parti

Question 13

A donee beneficiary

Accepted Answer

A) is not entitled to enforce a contract against either party. 
B) usually does not give consideration in return for the gift. 
C) will generally become a creditor beneficiary after his or her rights vest. 
D) is an incidental beneficiary. 
A) is not entitled to enforce a contract against either party. 
B) usually does not give consideration in return for the gift. 
C) will generally become a creditor beneficiary after his or her rights vest. 
D) is an incidental beneficiary.

Question 14

Assignment is prohibited when the obligor is agreeing to perform personal services.

Accepted Answer

A) True 
 B)False

Question 15

Which statement regarding assignment is accurate?

Accepted Answer

A) Gratuitous assignments are generally revocable regardless of whether they are oral or written. 
B) An assignment for consideration is irrevocable. 
C) An assignment becomes valid when the obligor receives notice of the assignment. 
D) An assignment must be written and follow all legal formalities. 
A) Gratuitous assignments are generally revocable regardless of whether they are oral or written. 
B) An assignment for consideration is irrevocable. 
C) An assignment becomes valid when the obligor receives notice of the assignment. 
D) An assignment must be written and follow all legal formalities.

Question 16

If Casey assigns her rights to receive income from rental property to Errol,then Errol will legally acquire any rights to the income held by Casey.

Accepted Answer

A) True 
 B)False

Question 17

Andrew Durham was injured in a job-related accident that resulted in a workers' compensation settlement agreement with the employer's insurance carrier,Traveler's Indemnity Company.The settlement agreement required Traveler's to pay Durham $2500 per month for the rest of his life.To finance its obligation,Traveler's purchased an annuity in its name.The settlement agreement required Traveler's approval or written consent prior to an assignment of the annuity payments.Durham later decided to open a business and went to a credit union for a $214,000 loan.The credit union loaned the money,taking a security interest in Durham's monthly annuity payments.Traveler's consent was never secured.Discuss the conditions in which a right may not be assigned and assess if this was this a valid assignment.

Accepted Answer

Assignments can be made unless: (a)the a

Question 18

A spouse who is named the beneficiary of a life insurance policy would ordinarily be

Accepted Answer

A) a creditor beneficiary. 
B) an incidental beneficiary. 
C) an intended beneficiary. 
D) a debtor beneficiary. 
A) a creditor beneficiary. 
B) an incidental beneficiary. 
C) an intended beneficiary. 
D) a debtor beneficiary.

Question 19

Generally,in comparison to a donee beneficiary,a creditor beneficiary has

Accepted Answer

A) about the same legal rights. 
B) substantially greater rights. 
C) substantially fewer legal rights. 
D) virtually no legal rights. 
A) about the same legal rights. 
B) substantially greater rights. 
C) substantially fewer legal rights. 
D) virtually no legal rights.

Question 20

A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.Under this arrangement the rock group is the

Accepted Answer

A) assignor. 
B) assignee. 
C) delegator. 
D) delegatee. 
A) assignor. 
B) assignee. 
C) delegator. 
D) delegatee.

Exam 17: Third Parties

When is an assignment valid and enforceable against an obligor?

Kirk purchases a sailboat on credit from Lakefront Sales,and Lakefront keeps a security interest in the boat.Lakefront then assigns the security interest to First Finance Co.Explain what having a security interest means.Under the UCC,what defenses can Kirk assert against First Finance?

A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.This is

An assignment is valid from the moment it is made,regardless of whether the assignor notifies the obligor.

Norm and Frank have a legal contract that is silent with regard to an assignment of the contract.In order for Norm to assign all or part of his rights under a contract,Frank must grant such permission to Norm.

Which of the following duties can probably be delegated?

The status of a third party is determined by

Robert hired James,a CPA,to prepare his tax returns.James was too busy and delegated the work to Sara,also a CPA.This delegation is

Someone who might have benefited from a contract between two others but has no right to enforce that agreement is

Briefly discuss the enforceability of contracts by third parties.

A donee beneficiary

Assignment is prohibited when the obligor is agreeing to perform personal services.

Which statement regarding assignment is accurate?

If Casey assigns her rights to receive income from rental property to Errol,then Errol will legally acquire any rights to the income held by Casey.

A spouse who is named the beneficiary of a life insurance policy would ordinarily be

Generally,in comparison to a donee beneficiary,a creditor beneficiary has

A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.Under this arrangement the rock group is the

Introduction to Law

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Introduction to Contracts

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Introduction to Sales

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Agency Law

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