Question 1

The transfer of a right under a contract is called a(n):

Accepted Answer

A)  assignment. 
B)  delegation. 
C)  affidavit. 
D)  bilateral contract. 
A)  assignment. 
B)  delegation. 
C)  affidavit. 
D)  bilateral contract.

Question 2

Deborah owes a debt to Casey.Sean contracts with Deborah to pay her debt to Casey.Casey is a creditor beneficiary of the contract between Sean and Deborah.

Accepted Answer

A) True 
 B)False

Question 3

Antiassignment clauses in contracts are not enforceable.

Accepted Answer

A) True 
 B)False

Question 4

Quick Corp.has $270,000 of outstanding accounts receivable.On March 10,1988,Quick assigned a $30,000 account receivable due from Pine,one of Quick's customers,to Taft Bank for value.On March 30,Pine paid Quick the $30,000.On April 5,Taft notified Pine of the March 10 assignment from Quick to Taft.Who is Taft entitled to collect the $30,000 from?

Accepted Answer

A)  Either Quick Corp.or Pine 
B)  Quick Corp.only 
C)  Pine only 
D)  Taft Bank cannot claim any money because it notified Quick Corp.too late 
A)  Either Quick Corp.or Pine 
B)  Quick Corp.only 
C)  Pine only 
D)  Taft Bank cannot claim any money because it notified Quick Corp.too late

Question 5

The effect of a valid delegation of duties is that it:

Accepted Answer

A)  discharges the delegator from any further liability. 
B)  is an automatic novation. 
C)  discharges the obligee from any further liability. 
D)  appoints the delegatee to perform the delegator's duty to the obligee. 
A)  discharges the delegator from any further liability. 
B)  is an automatic novation. 
C)  discharges the obligee from any further liability. 
D)  appoints the delegatee to perform the delegator's duty to the obligee.

Question 6

What is the purpose of vesting?

Accepted Answer

Courts have held that there is a point a

Question 7

Union Bank lent $200,000 to Wagner.Union required Wagner to obtain a life insurance policy naming Union as beneficiary.While the loan was outstanding,Wagner stopped paying the premiums on the policy.Union paid the premiums,adding the amounts paid to Wagner's loan.Wagner died and the insurance company refused to pay the policy proceeds to Union.Union may:

Accepted Answer

A)  recover the policy proceeds because it is a creditor beneficiary. 
B)  recover the policy proceeds because it is an incidental beneficiary. 
C)  not recover the policy proceeds because it is not in privity of contract with the insurance company. 
D)  not recover the policy proceeds because one cannot claim insurance for oneself. 
A)  recover the policy proceeds because it is a creditor beneficiary. 
B)  recover the policy proceeds because it is an incidental beneficiary. 
C)  not recover the policy proceeds because it is not in privity of contract with the insurance company. 
D)  not recover the policy proceeds because one cannot claim insurance for oneself.

Question 8

Fiona owed Lutz $5,000.As the result of an unrelated transaction,Lutz owed Bing that same amount.The three parties signed an agreement that Fiona would pay Bing instead of Lutz and Lutz would be discharged from all liability.The agreement among the parties is:

Accepted Answer

A)  unenforceable for lack of consideration. 
B)  voidable at Bing's option. 
C)  an accord and satisfaction. 
D)  a novation. 
A)  unenforceable for lack of consideration. 
B)  voidable at Bing's option. 
C)  an accord and satisfaction. 
D)  a novation.

Question 9

A third party is categorized as a donee beneficiary when:

Accepted Answer

A)  the promisee's primary purpose in contracting is to make a gift of the agreed-on performance to the third party. 
B)  the benefit derived by the third party was merely an unintended by-product of a contract that was created for the benefit of those who were parties to it. 
C)  he/she is unable to establish that the contract was made with the intent to benefit him/her. 
D)  the promisor's performance is intended to satisfy a legal duty that the promisee owes to the third party. 
A)  the promisee's primary purpose in contracting is to make a gift of the agreed-on performance to the third party. 
B)  the benefit derived by the third party was merely an unintended by-product of a contract that was created for the benefit of those who were parties to it. 
C)  he/she is unable to establish that the contract was made with the intent to benefit him/her. 
D)  the promisor's performance is intended to satisfy a legal duty that the promisee owes to the third party.

Question 10

Mr.Blue is in a contract with Mr.Brown for the repair of Mr.Blue's roof for $9,000.Mr.Blue tells Mr.Brown that Ms.White will pay him the $9,000 for the work performed.Ms.White's role in the contract is called what?

Accepted Answer

A)  Delegation 
B)  Assignment 
C)  Incorporation 
D)  Organizing 
A)  Delegation 
B)  Assignment 
C)  Incorporation 
D)  Organizing

Question 11

Apple assigns the same contract rights to Enzo,and then to Sam.Sam immediately notifies the obligor of the assignment to him;Enzo never notifies the obligor.When Sam notified the obligor,he did not know about the earlier assignment to Enzo.Sam will have the better right under the:

Accepted Answer

A)  "American rule." 
B)  "English rule." 
C)  Restatement (Second)of Contracts. 
D)  common law. 
A)  "American rule." 
B)  "English rule." 
C)  Restatement (Second)of Contracts. 
D)  common law.

Question 12

Mr.Blue is in a contract with Mr.Brown for the repair of Mr.Blue's roof for $9,000.Mr.Brown has already performed the work,but contacts Mr.Blue that he should pay his cousin Joe Jr.the amount owed.Joe Jr.'s status under the contract is called what?

Accepted Answer

A)  Delegation 
B)  Assignment 
C)  Incorporation 
D)  Organizing 
A)  Delegation 
B)  Assignment 
C)  Incorporation 
D)  Organizing

Question 13

Which of the following transfers will generally be valid without the consent of the other parties?

Accepted Answer

A)  The assignment by the lessee of a lease contract where rent is a percentage of sales. 
B)  The assignment by a purchaser of goods of the right to buy on credit without giving security. 
C)  The assignment by an architect of a contract to design a building. 
D)  The assignment by a patent holder of the right to receive royalties. 
A)  The assignment by the lessee of a lease contract where rent is a percentage of sales. 
B)  The assignment by a purchaser of goods of the right to buy on credit without giving security. 
C)  The assignment by an architect of a contract to design a building. 
D)  The assignment by a patent holder of the right to receive royalties.

Question 14

On May 2,Kurtz Co.assigned its entire interest in a $70,000 account receivable due in 60 days from Long to City Bank for $65,000.On May 4,City notified Long of the assignment.On May 7,Long informed City that Kurtz had committed fraud in the transaction out of which the account receivable arose and that payment would not be made to City.If City commences an action against Long,and Long is able to prove that Kurtz acted fraudulently:

Accepted Answer

A)  Long will be able to successfully assert fraud as a defense. 
B)  City will be entitled to collect $65,000,the amount paid for the assignment. 
C)  City will be entitled to collect $70,000 since fraud in the inducement is a personal defense which was lost on May 2. 
D)  City will be entitled to collect $70,000 since Long's allegation of fraud arose after notice of the assignment. 
A)  Long will be able to successfully assert fraud as a defense. 
B)  City will be entitled to collect $65,000,the amount paid for the assignment. 
C)  City will be entitled to collect $70,000 since fraud in the inducement is a personal defense which was lost on May 2. 
D)  City will be entitled to collect $70,000 since Long's allegation of fraud arose after notice of the assignment.

Question 15

Melanie owes $250 to Jessica.Jessica gifts the right to receive the money from Melanie to her daughter Kelly in writing.This assignment is:

Accepted Answer

A)  unenforceable since a beneficiary modification is prohibited. 
B)  enforceable despite the lack of consideration. 
C)  unenforceable because contractual rights cannot be assigned. 
D)  enforceable because the gift is made in writing. 
A)  unenforceable since a beneficiary modification is prohibited. 
B)  enforceable despite the lack of consideration. 
C)  unenforceable because contractual rights cannot be assigned. 
D)  enforceable because the gift is made in writing.

Question 16

Once an assignment occurs,the assignee acquires:

Accepted Answer

A)  greater obligations to fulfill the contract. 
B)  greater rights than the assignor. 
C)  same rights as the assignor had prior to assignment. 
D)  no rights at all. 
A)  greater obligations to fulfill the contract. 
B)  greater rights than the assignor. 
C)  same rights as the assignor had prior to assignment. 
D)  no rights at all.

Question 17

In a novation:

Accepted Answer

A)  the original obligor is completely discharged from his/her obligations under the contract. 
B)  the original obligee is completely discharged from his/her obligations under the contract. 
C)  the original obligor remains secondarily obligated. 
D)  both the original obligee and the original obligor remain obligated. 
A)  the original obligor is completely discharged from his/her obligations under the contract. 
B)  the original obligee is completely discharged from his/her obligations under the contract. 
C)  the original obligor remains secondarily obligated. 
D)  both the original obligee and the original obligor remain obligated.

Question 18

Jada owned an insurance policy in her life,on which she paid all the premiums.Shaun was named the beneficiary.Jada died and the insurance company refused to pay the insurance proceeds to Shaun.An action by Shaun against the insurance company for the insurance proceeds will be:

Accepted Answer

A)  successful because Shaun is a third-party donee beneficiary. 
B)  successful because Shaun is a proper assignee of Jada's rights. 
C)  unsuccessful because Shaun is not the owner of the policy. 
D)  unsuccessful because Shaun did not pay any of the premiums. 
A)  successful because Shaun is a third-party donee beneficiary. 
B)  successful because Shaun is a proper assignee of Jada's rights. 
C)  unsuccessful because Shaun is not the owner of the policy. 
D)  unsuccessful because Shaun did not pay any of the premiums.

Question 19

A donee beneficiary of a contract can recover under that contract.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is true of assignments?

Accepted Answer

A)  Early common law recognized assignments. 
B)  Contract rights have always been considered transferable. 
C)  Article 2 of the UCC deals with assignments of rights. 
D)  The laws regarding assignment have gradually become stricter. 
A)  Early common law recognized assignments. 
B)  Contract rights have always been considered transferable. 
C)  Article 2 of the UCC deals with assignments of rights. 
D)  The laws regarding assignment have gradually become stricter.

Exam 17: Rights of Third Parties

The transfer of a right under a contract is called a(n):

Deborah owes a debt to Casey.Sean contracts with Deborah to pay her debt to Casey.Casey is a creditor beneficiary of the contract between Sean and Deborah.

Antiassignment clauses in contracts are not enforceable.

The effect of a valid delegation of duties is that it:

What is the purpose of vesting?

Fiona owed Lutz $5,000.As the result of an unrelated transaction,Lutz owed Bing that same amount.The three parties signed an agreement that Fiona would pay Bing instead of Lutz and Lutz would be discharged from all liability.The agreement among the parties is:

A third party is categorized as a donee beneficiary when:

Mr.Blue is in a contract with Mr.Brown for the repair of Mr.Blue's roof for $9,000.Mr.Blue tells Mr.Brown that Ms.White will pay him the $9,000 for the work performed.Ms.White's role in the contract is called what?

Apple assigns the same contract rights to Enzo,and then to Sam.Sam immediately notifies the obligor of the assignment to him;Enzo never notifies the obligor.When Sam notified the obligor,he did not know about the earlier assignment to Enzo.Sam will have the better right under the:

Mr.Blue is in a contract with Mr.Brown for the repair of Mr.Blue's roof for $9,000.Mr.Brown has already performed the work,but contacts Mr.Blue that he should pay his cousin Joe Jr.the amount owed.Joe Jr.'s status under the contract is called what?

Which of the following transfers will generally be valid without the consent of the other parties?

Melanie owes $250 to Jessica.Jessica gifts the right to receive the money from Melanie to her daughter Kelly in writing.This assignment is:

Once an assignment occurs,the assignee acquires:

In a novation:

Jada owned an insurance policy in her life,on which she paid all the premiums.Shaun was named the beneficiary.Jada died and the insurance company refused to pay the insurance proceeds to Shaun.An action by Shaun against the insurance company for the insurance proceeds will be:

A donee beneficiary of a contract can recover under that contract.

Which of the following is true of assignments?

The Nature of Law

The Resolution of Private Disputes

Business and the Constitution

Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

Criminal Law and Procedure

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Unfair Competition

Introduction to Contracts

The Agreement: Offer

The Agreement: Acceptance

Consideration

Reality of Consent

Capacity to Contract

Illegality

Writing

Performance and Remedies

Formation and Terms of Sales Contracts

Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance Law

Introduction to Credit and Secured Transactions

Security Interests in Personal Property

Bankruptcy

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Transfers

The Agency Relationship

Third-Party Relations of the Principal and the Agent

Introduction to Forms of Business and Formation of Partnerships

Operation of Partnerships and Related Forms

Partners Dissociation and Partnerships Dissolution and Winding up

Limited Liability Companies, Limited Partnerships, and Limited Liability Limited Partnerships

History and Nature of Corporations

Organization and Financial Structure of Corporations

Management of Corporations

Shareholders Rights and Liabilities

Securities Regulation

Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals

Administrative Law

The Federal Trade Commission Act and Consumer Protection Laws

Antitrust: the Sherman Act

The Clayton Act, the Robinson-Patman Act, and Antitrust Exemptions and Immunities

Employment Law

Environmental Regulation

Filters