Question 1

An insurance policy is an example of a right that can be assigned.

Accepted Answer

A) True 
 B)False  False

Question 2

A transfer of contractual rights to a third party is an assignment.

Accepted Answer

A) True 
 B)False  True

Question 3

A contract between Laser Maintenance, Inc., and Medical Vision Operation Corporation contains a clause stating that any assignment is "void." This ordinarily prohibits

Accepted Answer

A)  any assignment. 
B)  no assignment. 
C)  only an assignment of contract rights to personal services. 
D)  only an assignment that would change the obligor's risk. 
A)  any assignment. 
B)  no assignment. 
C)  only an assignment of contract rights to personal services. 
D)  only an assignment that would change the obligor's risk. A

Question 4

A contract between Slim and Goldie may not be assigned if it

Accepted Answer

A)  does not expressly permit assignment. 
B)  involves a sale of goods. 
C)  involves personal services. 
D)  is oral. 
A)  does not expressly permit assignment. 
B)  involves a sale of goods. 
C)  involves personal services. 
D)  is oral.

Question 5

Phillip assigns his rights under a contract with Maria to his college roommate, John. Neither Phillip nor John notifies Maria of the assignment. The assignment

Accepted Answer

A)  will not be effective until notice is given to Maria. 
B)  will become effective after thirty days even if no notice is given to Maria. 
C)  is immediately effective. 
D)  can be circumvented. 
A)  will not be effective until notice is given to Maria. 
B)  will become effective after thirty days even if no notice is given to Maria. 
C)  is immediately effective. 
D)  can be circumvented.

Question 6

Banks may not assign their loan contracts to other firms.

Accepted Answer

A) True 
 B)False

Question 7

Privity of contract establishes the basic concept that third parties have no rights in contracts to which they are not parties.

Accepted Answer

A) True 
 B)False

Question 8

A right can be assigned even if the assignment will significantly alter the risks or duties of the obligor.

Accepted Answer

A) True 
 B)False

Question 9

Intended beneficiaries can sue to enforce a contract.

Accepted Answer

A) True 
 B)False

Question 10

The assignment of the same contract right to two different parties automatically cancels both assignments.

Accepted Answer

A) True 
 B)False

Question 11

Revenue & Sales Corporation and Software Solutions, Inc., enter into a contract for the design of custom software for which Revenue & Sales agrees to pay $4,500. Software Solutions transfers the right to payment under the contract to Creditline Company. Creditline is

Accepted Answer

A)  an assignor. 
B)  an assignee. 
C)  an obligee. 
D)  a delegate. 
A)  an assignor. 
B)  an assignee. 
C)  an obligee. 
D)  a delegate.

Question 12

Rights to receive funds can be assigned.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Richly Merchandise, Inc., contracts with Stand-Rite Contractors to build a store. Stand-Rite assigns the contract to Town Builders, which has a poor record of completing projects. Richly could most successfully argue that the con?tract cannot be assigned because

Accepted Answer

A)  Richly did not consent to the assignment. 
B)  Richly did not receive adequate consideration for the assignment. 
C)  the assignment will materially increase the risk of nonperformance. 
D)  Town Builders was not an original party to the deal. 
A)  Richly did not consent to the assignment. 
B)  Richly did not receive adequate consideration for the assignment. 
C)  the assignment will materially increase the risk of nonperformance. 
D)  Town Builders was not an original party to the deal.

Question 15

When rights under a contract are assigned unconditionally, the rights of the assignor are extinguished.

Accepted Answer

A) True 
 B)False

Question 16

As long as a contract is personal in nature, all rights under the contract can be assigned.

Accepted Answer

A) True 
 B)False

Question 17

There are no exceptions to the rule that any duty can be delegated.

Accepted Answer

A) True 
 B)False

Question 18

A transfer of contract rights to a third person is generally prohibited.

Accepted Answer

A) True 
 B)False

Question 19

Regional Steel, Inc., and Overland Transport Company enter into a con?tract. Smooth Oil Corporation, which will indirectly benefit from the deal, is prevented from having rights under the contract by the principle of

Accepted Answer

A)  assignment. 
B)  delegation. 
C)  privity. 
D)  vesting. 
A)  assignment. 
B)  delegation. 
C)  privity. 
D)  vesting.

Question 20

Michel, the owner of Nature's Refuge Café, and Olin enter into a contract under which Olin agrees to design an outdoor addition to the café for which Michel agrees to pay $3,000. This contract may not be assigned if

Accepted Answer

A)  the assignment will significantly change the risk of nonperformance. 
B)  the assignment is expressly prohibited by the terms of the contract. 
C)  the contract is uniquely personal in nature. 
D)  any of the choices. 
A)  the assignment will significantly change the risk of nonperformance. 
B)  the assignment is expressly prohibited by the terms of the contract. 
C)  the contract is uniquely personal in nature. 
D)  any of the choices.

Exam 16: Third Party Rights

An insurance policy is an example of a right that can be assigned.

A transfer of contractual rights to a third party is an assignment.

A contract between Laser Maintenance, Inc., and Medical Vision Operation Corporation contains a clause stating that any assignment is "void." This ordinarily prohibits

A contract between Slim and Goldie may not be assigned if it

Phillip assigns his rights under a contract with Maria to his college roommate, John. Neither Phillip nor John notifies Maria of the assignment. The assignment

Banks may not assign their loan contracts to other firms.

Privity of contract establishes the basic concept that third parties have no rights in contracts to which they are not parties.

A right can be assigned even if the assignment will significantly alter the risks or duties of the obligor.

Intended beneficiaries can sue to enforce a contract.

The assignment of the same contract right to two different parties automatically cancels both assignments.

Revenue & Sales Corporation and Software Solutions, Inc., enter into a contract for the design of custom software for which Revenue & Sales agrees to pay $4,500. Software Solutions transfers the right to payment under the contract to Creditline Company. Creditline is

Rights to receive funds can be assigned.

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

Richly Merchandise, Inc., contracts with Stand-Rite Contractors to build a store. Stand-Rite assigns the contract to Town Builders, which has a poor record of completing projects. Richly could most successfully argue that the con?tract cannot be assigned because

When rights under a contract are assigned unconditionally, the rights of the assignor are extinguished.

As long as a contract is personal in nature, all rights under the contract can be assigned.

There are no exceptions to the rule that any duty can be delegated.

A transfer of contract rights to a third person is generally prohibited.

Regional Steel, Inc., and Overland Transport Company enter into a con?tract. Smooth Oil Corporation, which will indirectly benefit from the deal, is prevented from having rights under the contract by the principle of

Michel, the owner of Nature's Refuge Café, and Olin enter into a contract under which Olin agrees to design an outdoor addition to the café for which Michel agrees to pay $3,000. This contract may not be assigned if

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