Deck 18: Third Persons and Contracts

Question 1

Whenever a contract is intended to benefit a third person, this person is referred to as a delegator.

Answer 1

False

Question 2

Only written words that show an intention to transfer or assign will be given the effect of an assignment.

Answer 2

False

Question 3

A person entitled to receive money may generally assign that right to another person.

Answer 3

True

Question 4

It is necessary that a third-party beneficiary be identified by name.

Question 5

Generally, only the parties to a contract may sue on it.

Question 6

An assignment is a transfer of rights, and a delegation is a transfer of duties.

Question 7

An assignee of a contract can bring suit on the contract only in the name of the assignor.

Question 8

Generally, an assignment may be in any form.

Question 9

The beneficiary of a life insurance policy is not subject to any policy restrictions that had been agreed to between the insured and the insurance company.

Question 10

An assignment, if otherwise valid, takes effect the moment it is made.

Question 11

Persons who are not a party to a contract can never bring a suit based on that contract.

Question 12

In general, one may assign rights if that does not cause the obligor's duties to increase or change materially.

Question 13

When a municipality contracts with a contractor to pave a street, homeowners on that block are third-party beneficiaries of the contract.

Question 14

An incidental beneficiary is the same thing as a third-party beneficiary.

Question 15

If the obligor is notified in any manner that there has been an assignment and that any money due must be paid to the assignee, the obligor's obligation can be discharged only by making payment to the assignee.

Question 16

The rights of a third-party beneficiary always can be destroyed without that beneficiary's consent.

Question 17

A third person does not have the status of an intended third-party beneficiary unless it is clear at the time the contract was formed that the parties intended to impose a direct obligation with respect to the third person.

Question 18

An employer can assign to another employer the right to have an employee work.

Question 19

An obligee's authorization to an obligor to pay a third person is an assignment to such a third person.

Question 20

When work is guaranteed by one who repairs a building, the owner, on selling the building, may assign the guarantee to the buyer.

Question 21

When duties under a contract are delegated, the party making the delegation remains responsible for the performance of the contract just as though no delegation had been made.

Question 22

The making of an assignment relieves the assignor of any and all obligations existing under the original contract.

Question 23

The party making an assignment is called the:

A)assignee.
B)assignor.
C)obligor.
D)successor.

Question 24

A third-party beneficiary contract may be amended:

A)with the consent of the beneficiary.
B)by operation of law.
C)if the contract allows modifications without the beneficiary's consent.
D)all of the above.

Question 25

A third-party beneficiary:

A)may be obligated to pay for services rendered.
B)may bring suit on and enforce the contract.
C)must consent to the contract.
D)must be identified by name.

Question 26

An assignment is valid only if:

A)it is written.
B)it is written and sworn to before a notary public.
C)there is a manifestation of the intent to assign.
D)the assignment is paid for by the assignee.

Question 27

Which of the following is not a third-partybeneficiary contract?

A)a contract in which A hires B to give A's niece piano lessons
B)a contract to repair sewers in front of Macy's Department Store
C)a life insurance contract with a named beneficiary
D)a contract between X and Y for Y to install a new door on Z's home

Question 28

An incidental beneficiary of a contract:

A)can sue to enforce the contract.
B)cannot sue to enforce the contract.
C)is a beneficiary specifically named in the contract.
D)is an assignee of the direct beneficiary.

Question 29

Generally, it is easiest to assign:

A)credit.
B)personal services.
C)money.
D)an agreement calling for the personal satisfaction of the assignor.

Question 30

An assignee's rights are the same as those that had been possessed by the assignor.

Question 31

Under the UCC, an assignment of all the assignor's rights under a contract generally is held to be both an assignment of rights and a delegation of duties.

Question 32

In the case of a bilateral contract involving a promise to deliver goods exchanged in return for a promise to pay money, each party may:

A)assign rights only.
B)delegate duties only.
C)assign rights and delegate duties.
D)assign rights that then will relieve them from the duties.

Question 33

If there is a time limitation or any other restriction in a contract, a third-party beneficiary:

A)may ignore it.
B)may void it.
C)is bound thereby.
D)must consent to be bound thereby before it is effective.

Question 34

When a lease is assigned, the assignee becomes the sole obligor for rent payments, and the original lessee is discharged from the lease.

Question 35

A person who has a right to buy on credit can transfer that right to a close relative.

Question 36

An obligor required to render a performance under a contract can transfer the duty to perform to another person whenever desired.

Question 37

In a contract in which a tenant borrowed money from a bank for the purpose of adding a bathroom to her apartment, the landlord is:

A)a direct beneficiary.
B)in privity of contract with the tenant.
C)a third-party beneficiary.
D)an incidental beneficiary.

Question 38

A subcontractor is a party to whom a general contractor delegates duties.

Question 39

An assignment:

A)is a contract.
B)requires consideration.
C)is a transfer of rights.
D)is not enforceable.

Question 40

A life insurance contract is a third-party:

A)beneficiary contract.
B)assignment contract.
C)payment contract.
D)performance contract.

Question 41

An obligor may delegate his or her duties to perform under a contract when the:

A)performance of the duty is standardized and nonpersonal.
B)obligor is unable to perform his or her duties.
C)contract is silent as to the right of assignment.
D)obligor is an expert in his or her specialized duties under the contract.

Question 42

When a buyer assigns the right to goods under a contract, the buyer's liability to make payment to the seller is:

A)transferred to the third party.
B)terminated.
C)still in effect.
D)shared equally with the third party.

Question 43

Walker Meeks is currently a party to two contracts. On the first contract, he has agreed to paint a portrait of a gentleman riding a horse. This portrait is for the wall of the gentleman's study. The gentleman chose Meeks for his realism in portraying the true feelings behind portrait models. Meeks' second contract is to paint the house of Sylvia Sneed.
Meeks is offered an employment contract for a large sum of money. He wishes to accept, but this would render him unable to complete the aforementioned contracts. Meeks delegates the painting of the portrait to his friend Bob, an impressionist, and delegates the painting of Sylvia's home to Ted, a professional house painter.
Neither the gentleman nor Sylvia intends to allow the delegation to occur. Comment on the probable outcome of the dispute.

Question 44

The delegator of construction duties remains liable if:

A)the delegatee performs the work properly, but the obligee did not approve of the delegation.
B)the delegatee performs the work improperly.
C)the obligee objects in writing to the delegatee's performance of the work, even if the delegatee performs the work properly.
D)the value of the contract is $500 or more and the delegatee performs the work properly.

Question 45

A professor owned a home next door to a very dilapidated, neglected home. John Cataldo purchased the home next door and made a contract with Wizard Home Improvements for a complete renovation of the property. The professor was delighted because the improvement of the Cataldo home was upgrading the neighborhood and raising the value of the professor's home.
After making the last required payment on the contract, John Cataldo became seriously ill and ultimately was taken to a nursing home for care.
When Wizard learned of Cataldo's illness and confinement, Wizard ceased work on the Cataldo home. Because the outside renovation work had not been completed, the premises began to return to its former rundown condition. The professor ultimately sued Wizard as a third-party beneficiary of the contract between Cataldo and Wizard. What is the probable outcome of the lawsuit?

Question 46

If an obligor could successfully defend against a suit brought by the assignor:

A)the obligor will also prevail against the third-party beneficiary.
B)the obligor will also prevail against the assignee.
C)the obligor will also prevail against the incidental beneficiary.
D)none of the above.

Question 47

The right to performance under a contract can be assigned:

A)although the sufficiency of the performance is to be determined by the personal satisfaction of the assignor.
B)although the contract requires the performance of personal services.
C)although the contract provides for the extension of credit.
D)if the burden of performing is not materially increased thereby.

Question 48

Janet Jones sold the assets and liabilities of her coin-operated laundry to Kevin Katz for $10,000. The assets of the business included all of the washers and dryers. The liabilities included the amounts still owing on seven new dryers, which had been purchased recently from Dryer Company under an installment contract. Katz agreed to make the installment payments on the new dryers as they came due. After Katz failed to make an installment payment when it was due, Dryer Company sued Jones. Jones claimed she no longer was liable. How will the court decide?

Question 49

In general, an assignee stands:

A)in a position subordinate to the assignor.
B)exactly in the position of the assignor.
C)in a position superior to the assignor.
D)in a position similar to, but not equal to, the assignor.

Question 50

The modern trend is to consider a general assignment to be:

A)a transfer of property only.
B)both a transfer of rights and a delegation of duties.
C)a delegation of duties only.
D)a transfer of rights only.

Question 51

The making of an assignment __________ the assignor of any obligation of the contract.

A)relieves
B)conditionally relieves
C)does not relieve
D)discharges