Exam 7: Third-Party Rights and Discharge

If a contract is silent about assignment and delegation,which of the following is generally true?

Impossibility,excusing performance of a contract,is measured objectively.

Joe,a well known plastic surgeon,decides he would rather be golfing than perform surgery on his patient Missy's nose.As such,he delegates the job to a colleague,Frank,who is a highly respected foot doctor.Because Joe chose a competent medical profession to do Missy's nose,the delegation is a valid one.

For a condition to be enforceable,it must be an express condition.

Which of the following is true about third-party donee beneficiaries?

Sprawlmaker,Inc.was a developer of shopping malls and other shopping centers.Sprawlmaker was developing a shopping mall in suburban Detroit.Sprawlmaker approached Cindy about the development of a strip mall across the street from this shopping mall.Cindy and Sprawlmaker reached an agreement where Sprawlmaker would construct the strip mall for Cindy.She would become the owner and would lease it out to tenants.The mall was already under construction at this point.Because Cindy's project was much smaller and simpler,it was finished before the shopping mall.Cindy paid Sprawlmaker all amounts due under their contract.There began to be problems with the construction of the shopping mall.Eventually Sprawlmaker and the construction company building the mall stopped communicating and construction stopped.Meanwhile,Cindy was unable to secure leases for most of the space in her strip mall.Cindy wants to sue to recover for lost rent.Discuss Cindy's options and the likely outcome of a suit.

A husband buys an insurance policy with a face value of $100,000 and names his wife as sole beneficiary.When the husband dies,the insurance company refuses to pay the wife the $100,000.Which of the following best describes this situation?

A third party who is not in privity of contract but who has rights under the contract and can enforce the contract against the obligor is said to be an intended beneficiary.

In a condition subsequent,the duty of performance is discharged upon the failure to meet a condition after the duty has already arisen.

A car owner enters into a contract to buy 50 gallons of gasoline each month in 2002 from Greedy Oil Co.for $1.70 per gallon.By June,the wholesale price of gasoline is $1.80 and the retail price is $1.90.Greedy wants out of the contract.Which of the following is most likely true?

Hargrove,Inc.is a distributor of grains and other farm commodities,which it buys directly from the farmers.Hargrove contracts with National Bakery Association to sell and deliver 1,000 tons of wheat during August.The wheat is to be delivered by rail (train).During July,before the wheat was shipped,the railroads went on strike.The wheat could not be shipped by train.However,the grain could be shipped by truck,but only at a cost double that of trains.Hargrove refused to ship the wheat at the extra expense.National sues for breach of contract.It should be noted that the trains have gone on strike four times in the past 10 years,and that there was talk of a strike before this contract was created.Who will win in this lawsuit and why?

An assignor is someone who subsequently gains rights under a preexisting contract.

A force majeure clause:

In general,contract rights may be assigned.Which of the following types of contract rights may not be assigned?

The duties in a personal service contract can always be delegated.

Amy agrees to build a barn for Sally.The contract provides that Sally must be "personally satisfied with the barn." If the barn is completed in a workmanlike manner,which of the following tests would be used to test Sally's satisfaction?

John contracted to rent a condominium in the U.S.Virgin Islands for the month of September.In early August,the condominium was destroyed by a hurricane.The contract contained a clause that the parties' obligations would be discharged in the event of a natural disaster.In this situation:

Mary signs a contract for an addition to her home that will extend the living room and add two bedrooms to the house. The contractor is responsible for all the design and construction, as well as all the redecorating of the living room and the decorating of the two bedrooms. The following provision is part of the contract: The parties agree that all the work in this contract must meet Mary’s own personal satisfaction. In addition, the work must also meet the approval and satisfaction of Mary’s brother, who is a builder and licensed contractor. Mary’s brother lives in another city and is not involved in the planning or construction of the addition, but has agreed with Mary to inspect the work at or near the time of completion. Mary has this work done while she is living in another country for a couple of months. Upon her return, the work is almost finished. She does not like the following aspects of the work: 1. The roofing material on the addition does not match the material on the rest of the house. 2. She does not like the style of the new draperies, although they are high quality and of a current style. 3. She is displeased with some of the workmanship on the wood trim around the windows. She admits that she is a perfectionist about this and that most persons would be satisfied with it. 4. The concrete foundation under the addition was not as thick as she would like it. It is of standard thickness and would be satisfactory to most persons. Her brother comes and inspects the addition. He notes three problems: 1. The slope of the new part of the roof is not steep enough for the type of roofing materials used. They should have used something more appropriate for a nearly flat roof. 2. There should have been a bathroom included as part of the addition. The house originally had three bedrooms and one bathroom. Now there are five bedrooms and only one bathroom. Furthermore, the new bedrooms are located a long distance from the bathroom. 3. The windows are not of sufficient quality. Mary wants to force the contractor to make all of these changes based on the personal satisfaction clause in the contract. Which of these, if any, can she force the contractor to change? Explain your reasoning with respect to each item.

Sandy Skier is having lunch one March day with a friend,Pat,who is president of Great Rockies Ski Area.Sandy holds a season pass,good through April,at Great Rockies.The following conversation takes place: Pat: You know we are having some financial problems.We need more skiers who are paying.Most of our skiers lately have been season pass holders...the only problem is that the money from selling the passes is long gone.We're going to have to do two things.First,we must find a way to get more skiers to come who pay for a daily lift ticket.Second,we are going to have to start charging the pass holders $10 a day to ski. Sandy: I don't know how the season pass holders will like that.I myself can't afford even $10 extra right now. Pat: I know it won't be popular.Sandy,I'll make a deal for you and your friends.The other part of my strategy is to get more new skiers.You know how focused people are on lift safety after some of the recent problems.Here's what I want you to do.I'll pay you to ski at Megasnow Valley,our main competitor,and all you have to do is leave copies of this memorandum everywhere you can.This is simply some information that the maker of the chairlift distributes relating to procedures to use when a safety problem is discovered in a chairlift.It doesn't say anything about there actually being a problem,but if you leave copies of this around,rumors will probably start.So,leave copies on the ground and on the chairs,on tables in the restaurants,and while riding up the lifts or in line.Show it to people and raise questions,but don't say that there actually is a problem. Sandy: I think I can do that. Pat: Well,that's the deal. Sandy: O.K. Sandy and eight of her friends,all season pass holders,then go and spend the entire spring break at Megasnow Valley spreading these memos around.The following week,they then go to Pat President to be reimbursed for 9 days of lift tickets each,but Pat refuses to pay anyone,including Sandy.Sandy's friend Kim,and Sandy,want to sue for the cost of their lift tickets.How would a court analyze their cases and what would the likely outcome be? If Sandy were able to recover for her own lift ticket costs,would her friends?

Under both an "assumption of duties" and a "declaration of duties," the delegatee is legally liable to the obligee for nonperformance.