Question 1

In a third-party beneficiary contract, the third party's rights arise at the time the contract is formed.

Accepted Answer

A) True 
 B)False

Question 2

Carl, a contractor, and Lyle, a landowner, have a contract whereby Carl is to perform routine construction services according to the blueprints that Lyle has provided. Carl assigns the contract to David, a developer. As a result of this assignment:

Accepted Answer

A)  Lyle can bring suit based upon detrimental reliance. 
B)  Carl has no more rights or responsibilities with regard to the contract. 
C)  Carl no longer has any rights under the contract, but he remains responsible for the duties he agreed to perform. 
D)  Carl has all of his rights under the contract, but he has no responsibility for the performance of the duties. 
A)  Lyle can bring suit based upon detrimental reliance. 
B)  Carl has no more rights or responsibilities with regard to the contract. 
C)  Carl no longer has any rights under the contract, but he remains responsible for the duties he agreed to perform. 
D)  Carl has all of his rights under the contract, but he has no responsibility for the performance of the duties.

Question 3

In general, an assignment includes an implied warranty that the assignor who receives value will do nothing to defeat or impair the assignment once it is delivered.

Accepted Answer

A) True 
 B)False

Question 4

Barbara owes Arthur $2,000. On July 1, Arthur assigns the right to the $2,000 to Caleb. Thereafter, on July 15, Arthur assigns the same right to David, who in good faith gives value for it and knows nothing about the first assignee. In this case:

Accepted Answer

A)  Caleb has the right to the payment of $2,000. 
B)  David has the right to the $2,000. 
C)  neither Caleb nor David can claim the $2,000. 
D)  The rule differs by state. 
A)  Caleb has the right to the payment of $2,000. 
B)  David has the right to the $2,000. 
C)  neither Caleb nor David can claim the $2,000. 
D)  The rule differs by state.

Question 5

In some states, the vesting of a third party's rights occurs only when the third party learns of the contract and assents to it.

Accepted Answer

A) True 
 B)False

Question 6

Third party rights in contracts can arise by assignment of rights, delegation of duties, or in third party beneficiary contracts.

Accepted Answer

A) True 
 B)False

Question 7

In an assignment or delegation, the third parties' rights or duties arise after the contract is made.

Accepted Answer

A) True 
 B)False

Question 8

Assignments of future wages are subject to statutes that sometimes prohibit them altogether.

Accepted Answer

A) True 
 B)False

Question 9

Discuss defenses available to the promisor in an action by an intended third-party beneficiary to enforce the promise.

Accepted Answer

In an action by an intended beneficiary

Question 10

The general rule is that an assignee stands in the shoes of the assignor. He acquires the rights of the assignor but acquires no new or additional rights.

Accepted Answer

A) True 
 B)False

Question 11

Barbara owes Arthur $2,000. On July 1, Arthur assigns the debt to Caleb. Thereafter on July 15, Arthur assigns the same right to David, who in good faith gives value for it and knows nothing about the first assignee. David immediately notifies Barbara of the assignment. In this case:

Accepted Answer

A)  under the majority rule, David has priority. 
B)  under the English Rule, a second assignment of the same claim can never be effective. 
C)  under the English Rule, David has priority. 
D)  under all of the rules, Caleb has priority since he was the first assignee in time. 
A)  under the majority rule, David has priority. 
B)  under the English Rule, a second assignment of the same claim can never be effective. 
C)  under the English Rule, David has priority. 
D)  under all of the rules, Caleb has priority since he was the first assignee in time.

Question 12

If Randall and Gale agree to an assignment of Randall's contract with Doug:

Accepted Answer

A)  there is no ambiguity; this is an assignment of rights only. 
B)  there is no ambiguity; this is a delegation of duties only. 
C)  under both the Code and the Restatement, unless circumstances or language indicate the contrary, an assignment of "the contract" means the assignment of rights and a delegation of duties. 
D)  the language is ambiguous and, therefore, the assignment is unenforceable. 
A)  there is no ambiguity; this is an assignment of rights only. 
B)  there is no ambiguity; this is a delegation of duties only. 
C)  under both the Code and the Restatement, unless circumstances or language indicate the contrary, an assignment of "the contract" means the assignment of rights and a delegation of duties. 
D)  the language is ambiguous and, therefore, the assignment is unenforceable.

Question 13

A gratuitous assignment is revocable by the assignor.

Accepted Answer

A) True 
 B)False

Question 14

Assignments that materially increase the risk, duty, or burden on the obligor will nonetheless remain effective and enforceable.

Accepted Answer

A) True 
 B)False

Question 15

Donee beneficiaries and incidental beneficiaries are called intended beneficiaries.

Accepted Answer

A) True 
 B)False

Question 16

Professor Doright has a life insurance policy on his own life that provides that in the event of his death, his mother will receive the proceeds. Professor Doright's mother is a(n):

Accepted Answer

A)  incidental beneficiary. 
B)  creditor beneficiary. 
C)  donee beneficiary. 
D)  assignee. 
A)  incidental beneficiary. 
B)  creditor beneficiary. 
C)  donee beneficiary. 
D)  assignee.

Question 17

A partial assignment is a transfer of a portion of the contractual rights to one or more assignees.

Accepted Answer

A) True 
 B)False

Question 18

In the case of Speelman v. Pascal , the court held that:

Accepted Answer

A)  a gratuitous assignment is terminated by the assignor's death, even if the assignor made an effective delivery of the assignment prior to his death. 
B)  assignments of rights to sums that are expected to become due to the assignor are enforceable. 
C)  assignments cannot be made of sums that are not presently due but are expected to become due in the future. 
D)  personal contracts are not assignable. 
A)  a gratuitous assignment is terminated by the assignor's death, even if the assignor made an effective delivery of the assignment prior to his death. 
B)  assignments of rights to sums that are expected to become due to the assignor are enforceable. 
C)  assignments cannot be made of sums that are not presently due but are expected to become due in the future. 
D)  personal contracts are not assignable.

Question 19

According to the Restatement, unless circumstances indicate the contrary, a contract term prohibiting assignment of the contract bars both the assignment of rights and the delegation to the assignee of the assignor's duty of performance.

Accepted Answer

A) True 
 B)False

Question 20

John transfers to Peggy his right to receive $555 from Linda. Linda  is the assignee.

Accepted Answer

A) True 
 B)False

Exam 16: Third Parties to Contracts

In a third-party beneficiary contract, the third party's rights arise at the time the contract is formed.

Carl, a contractor, and Lyle, a landowner, have a contract whereby Carl is to perform routine construction services according to the blueprints that Lyle has provided. Carl assigns the contract to David, a developer. As a result of this assignment:

In general, an assignment includes an implied warranty that the assignor who receives value will do nothing to defeat or impair the assignment once it is delivered.

Barbara owes Arthur $2,000. On July 1, Arthur assigns the right to the $2,000 to Caleb. Thereafter, on July 15, Arthur assigns the same right to David, who in good faith gives value for it and knows nothing about the first assignee. In this case:

In some states, the vesting of a third party's rights occurs only when the third party learns of the contract and assents to it.

Third party rights in contracts can arise by assignment of rights, delegation of duties, or in third party beneficiary contracts.

In an assignment or delegation, the third parties' rights or duties arise after the contract is made.

Assignments of future wages are subject to statutes that sometimes prohibit them altogether.

Discuss defenses available to the promisor in an action by an intended third-party beneficiary to enforce the promise.

The general rule is that an assignee stands in the shoes of the assignor. He acquires the rights of the assignor but acquires no new or additional rights.

Barbara owes Arthur $2,000. On July 1, Arthur assigns the debt to Caleb. Thereafter on July 15, Arthur assigns the same right to David, who in good faith gives value for it and knows nothing about the first assignee. David immediately notifies Barbara of the assignment. In this case:

If Randall and Gale agree to an assignment of Randall's contract with Doug:

A gratuitous assignment is revocable by the assignor.

Assignments that materially increase the risk, duty, or burden on the obligor will nonetheless remain effective and enforceable.

Donee beneficiaries and incidental beneficiaries are called intended beneficiaries.

Professor Doright has a life insurance policy on his own life that provides that in the event of his death, his mother will receive the proceeds. Professor Doright's mother is a(n):

A partial assignment is a transfer of a portion of the contractual rights to one or more assignees.

In the case of Speelman v. Pascal , the court held that:

According to the Restatement, unless circumstances indicate the contrary, a contract term prohibiting assignment of the contract bars both the assignment of rights and the delegation to the assignee of the assignor's duty of performance.

John transfers to Peggy his right to receive $555 from Linda. Linda is the assignee.

Introduction to Law

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