Exam 15: Third Party Rights

A-One Landscapers, Inc., owes Friendly Finance Company $5,000. A-One enters into a contract with Suburban Office Park under which A-One promises to maintain the landscaping on Suburban's property. Under the contract, Suburban promises to pay Friendly Finance the amount that will be due A-One until A-One's debt to Friendly Finance is paid. A-One performs as promised, but Suburban does not pay Friendly Finance. Can Friendly Finance succeed in a suit against Suburban? Why or why not?

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(Essay)

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Question 1

Correct Answer:

Verified

Friendly Finance could succeed in a suit against Suburban. When a party promises to perform under a contract with the express intent that the other party's payment benefit a third party, the third party is an intended beneficiary. Assuming a contract is otherwise enforceable, an intended beneficiary can successfully sue to enforce the contract under which he or she will benefit.
The contract between A-One and Suburban expressly states that Suburban's payment for A-One's performance is to go directly to Friendly Finance. Thus, it is a third party beneficiary contract. Friendly Finance, the third party beneficiary, is, under the terms of the contract, an intended beneficiary. As such, Friendly Finance can successfully sue Suburban to enforce Suburban's promise to pay A-One's debt.

A third party's right to control the details of performance of a contract indicates that the third party is an intended beneficiary.

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(True/False)

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Question 2

Correct Answer:

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True

A transfer of contract rights to a third party is an incidental benefit .

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(True/False)

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Question 3

Correct Answer:

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False

A delegation relieves the delegator of the obligation to perform.

(True/False)

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Question 4

Rachel and Stuart enter into a contract for the sale of Rachel's textbook at the end of the fall semester for which Stuart agrees to pay $75. Rachel wants to transfer her right to payment for the book to Terry. This transfer is

(Multiple Choice)

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Question 5

No contract can prohibit delegation of the duties of the contract.

(True/False)

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Question 6

Bill and Charlene enter into a contract for the clearing, plowing, and preparing of Charlene's 100-acre tract for which she agrees to pay $1,000. Bill transfers his duty under this contract to Dewey. The delegatee is

(Multiple Choice)

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Question 7

A contract between Laser Equipment, Inc., and Medical Center contains a clause stating that any assignment is "void." This ordinarily prohibits

(Multiple Choice)

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Question 8

Ben and Cathy enter into a contract under which Ben agrees to cater Cathy's wedding. The contract expressly prohibits any transfer of rights without the assignee's consent. Cathy may transfer the right to receive Ben's services to her sister Diane

(Multiple Choice)

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Question 9

Ian owes Jo $5,000. Jo assigns the right to this payment to Kyle. Notice by Jo to Ian of the assignment

(Multiple Choice)

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Question 10

An "assignment of all rights" can create an assignment of rights but not a delegation of duties.

(True/False)

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Question 11

Steel, Inc., and Transport Company enter into a contract. UniOil Corporation, which will indirectly benefit from the deal, is prevented from having rights under the contract by the principle of

(Multiple Choice)

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Question 12

Fact Pattern 15-1 Restore Construction Company enters into a contract with Sam to remodel Tess's Home Store, using products from United Building Supplies. Refer to Fact Pattern 15-1. Halfway through the project, Restore refuses to finish the job. The contract can be enforced against Restore by

(Multiple Choice)

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Question 13

Pam borrows $5,000 from Quality Auto Sales to buy a car. When Pam does not pay the loan or return the car, Quality wants to transfer the right to the payment to Rapid Collection Agency. Rapid agrees to pay Quality for this right, but for a price that is less than the amount owed. Can Quality transfer this right to Rapid without Pam's consent? If so, and Quality committed fraud in the deal with Pam, could Pam legitimately refuse to pay Rapid? Explain.

(Essay)

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Question 14

Notice is legally necessary to establish the validity of an assignment.

(True/False)

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Question 15

If a contract requires that performance be rendered directly to a third party, the third party is an incidental beneficiary.

(True/False)

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Question 16

Laramie contracts to provide cattle-herding services to Miles for $5,000 per month. Laramie cannot transfer this duty

(Multiple Choice)

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Question 17

D'Alemberte contracts with Ellas to render personal nursing services for the benefit of Federica. This is

(Multiple Choice)

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Question 18

If an assignment of a right changes a risk or duty, but not materially, that right cannot be assigned.

(True/False)

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Question 19

Until the obligor has notice of assignment, the obligor can discharge his or her obligation by performance to any party.

(True/False)

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Question 20

Showing 1 - 20 of 72

Exam 15: Third Party Rights

A third party's right to control the details of performance of a contract indicates that the third party is an intended beneficiary.

A transfer of contract rights to a third party is an incidental benefit .

A delegation relieves the delegator of the obligation to perform.

Rachel and Stuart enter into a contract for the sale of Rachel's textbook at the end of the fall semester for which Stuart agrees to pay $75. Rachel wants to transfer her right to payment for the book to Terry. This transfer is

No contract can prohibit delegation of the duties of the contract.

Bill and Charlene enter into a contract for the clearing, plowing, and preparing of Charlene's 100-acre tract for which she agrees to pay $1,000. Bill transfers his duty under this contract to Dewey. The delegatee is

A contract between Laser Equipment, Inc., and Medical Center contains a clause stating that any assignment is "void." This ordinarily prohibits

Ben and Cathy enter into a contract under which Ben agrees to cater Cathy's wedding. The contract expressly prohibits any transfer of rights without the assignee's consent. Cathy may transfer the right to receive Ben's services to her sister Diane

Ian owes Jo $5,000. Jo assigns the right to this payment to Kyle. Notice by Jo to Ian of the assignment

An "assignment of all rights" can create an assignment of rights but not a delegation of duties.

Steel, Inc., and Transport Company enter into a contract. UniOil Corporation, which will indirectly benefit from the deal, is prevented from having rights under the contract by the principle of

Fact Pattern 15-1 Restore Construction Company enters into a contract with Sam to remodel Tess's Home Store, using products from United Building Supplies. Refer to Fact Pattern 15-1. Halfway through the project, Restore refuses to finish the job. The contract can be enforced against Restore by

Notice is legally necessary to establish the validity of an assignment.

If a contract requires that performance be rendered directly to a third party, the third party is an incidental beneficiary.

Laramie contracts to provide cattle-herding services to Miles for $5,000 per month. Laramie cannot transfer this duty

D'Alemberte contracts with Ellas to render personal nursing services for the benefit of Federica. This is

If an assignment of a right changes a risk or duty, but not materially, that right cannot be assigned.

Until the obligor has notice of assignment, the obligor can discharge his or her obligation by performance to any party.

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