Deck 13: Third-Party Rights and Discharge

Question 1

Mr.Jacob,who is terminally ill,writes a will transferring all his assets to his daughter Silvia,in the event of his death.The doctors say that Mr.Jacob will live for about six months.The day after the will is written,Silvia wishes to transfer her expected inheritance to her son,Jacob Jr.This assignment will be ________.

A) valid
B) conditionally valid
C) invalid
D) re-assignable by Jacob Jr.

Answer 1

C

Question 2

Which of the following is true of an assignment of a right?

A) The unconditional assignment of a contract right retains all the assignor's rights.
B) The obligor is entitled to performance from the assignor.
C) The assignor loses the right to sue the obligor directly for nonperformance in an unconditional assignment.
D) The obligor cannot raise personal defenses against the assignee.

Answer 2

C

Question 3

A(n)________ is used if the obligor does not want to deal with or render performance to an unknown third party.

A) anti-assignment clause
B) approval clause
C) novation agreement
D) anti-delegation clause

Answer 3

A

Question 4

A party who owes a duty of performance under a contract is called the ________.

A) obligor
B) assignor
C) assignee
D) obligee

Question 5

When an assignor makes an assignment of a right under a contract,the assignee is under a duty to ________.

A) notify the obligor that the performance must be rendered to the assignee
B) discharge the original contract between the assignor and the obligor
C) assign the right to a subsequent assignee
D) render the obligor's performance to the assignor

Question 6

An actor signs a contract with a movie studio where she agrees to star in a comedy.Which of the following is true of assignment of such a contract?

A) The movie studio can assign the contract to another movie studio.
B) The movie studio is at liberty to include the actor in a different movie.
C) If the actor is injured, she can assign the contract to another popular actor.
D) Both the actor and the studio can agree that their contract can be assigned.

Question 7

Which of the following is true in the event that an assignee does not provide a notice of assignment to the obligor?

A) The assignee's only course of action is to sue the obligee for damages.
B) The assignee cannot sue the assignor for damages.
C) The obligor's only recourse is to sue the assignee for damages.
D) The assignee cannot sue the obligor to recover payment.

Question 8

Karen borrows $10,000 from Celeste.Karen is to pay Celeste the principal amount,with 8 percent interest,over five years in 60 equal monthly payments.After one year of receiving proper payments from Karen,Celeste assigns this right to receive future payments to Larry.Who has the duty to notify Celeste about the assignment?

A) a notary public
B) Larry
C) Karen's attorney
D) the authority who drafted the contract

Question 9

If an obligor continues to make payments to an assignor in spite of receiving notice from an assignee,________.

A) the assignee is liable to the assignor for nonperformance
B) the assignee can sue the obligor for recovery
C) the assignor loses his or her right to performance from the obligor
D) the assignee can recover payment from both the assignor and the obligor

Question 10

Howard is injured by Penny in a car accident,caused due to Penny's negligence.Which of the following statements holds true for Howard's right to assign?

A) Howard cannot assign the recovery of punitive damages from Penny.
B) Howard can only assign the recovery of his medical expenses from Penny.
C) Howard's right to sue Penny cannot be assigned.
D) Howard can only assign his right to take the case to the appellate court.

Question 11

A legal right that arises out of a breach of contract is ________.

A) assignable
B) not assignable
C) subject to approval clause
D) considered a future right

Question 12

The transfer of contractual rights by an obligee to another party is known as a(n)________.

A) assignment
B) accommodation
C) delegation
D) substitution

Question 13

Kimlon Informatics has to recover $5,000 from a client for its services.The recovery period is 100 days but Kimlon needs the money immediately.It sells the right of collecting money from its client to Quikcollect,a collection agency.Here,Kimlon Informatics is the ________.

A) obligor
B) obligee
C) subassignee
D) assignee

Question 14

Which of the following should provide a notice of assignment to the obligor?

A) the assignee
B) the assignor
C) the obligee
D) the facilitator

Question 15

An obligee who transfers the right to receive performance is called the ________.

A) subsequent assignor
B) obligor
C) assignor
D) assignee

Question 16

Which of the following rights is generally assignable in the United States?

A) personal service contract
B) a future right
C) legal action
D) recovery of debt

Question 17

An ________ refers to a third party who acquires rights under other people's contracts.

A) obligee
B) obligor
C) assignee
D) incidental beneficiary

Question 18

Ellen,who has a safe driving record,purchases automobile insurance from an insurance company.Which of the following is the accurate reason why Ellen would be disallowed from assigning her rights to be insured to another driver?

A) The assignment would materially alter the risk and duties of the insurance company.
B) Claiming insurance is a future right and hence cannot be assigned.
C) Insurance is a personal service contract and hence cannot be assigned.
D) Personal contracts like insurance are assignable only with the agreement of all parties involved in the contract.

Question 19

Among the parties to a contract,the ________ is the debtor.

A) obligee
B) obligor
C) assignor
D) assignee

Question 20

Jay Bosley borrows $15,000 from the County Bank with an interest rate of 9 percent.Jay defaults on the loan,and County Bank assigns the rights to an agency to recover the money.Jay can raise a defense against County Bank if ________.

A) the agency acts on behalf of the bank
B) the agency discharges its contract with the bank
C) the agency demands a higher interest rate
D) the agency sues Jay on charges of nonperformance

Question 21

In a creditor beneficiary contract,if the new debtor fails to perform according to the new contract,the creditor beneficiary can ________.

A) enforce the original contract against the original debtor
B) sue the original promisor on the second contract
C) hold both the new and the original debtors liable for nonperformance
D) benefit from imposing the new contract on the original debtor

Question 22

What does the American Rule for successive assignments provide?

A) The last assignment in time prevails, regardless of notice.
B) The first notified assignment prevails.
C) The first assignment in time prevails, regardless of notice.
D) Only notified assignments prevail.

Question 23

In a delegation,an obligor who transfers his or her duty is called a(n)________.

A) obligee
B) assignee
C) delegator
D) delegatee

Question 24

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

A) A creditor beneficiary is considered an unintended beneficiary.
B) An intended third-party beneficiary cannot enforce the contract against the promisor.
C) An incidental beneficiary cannot sue under other people's contracts.
D) An incidental beneficiary is a third party who is benefitted intentionally.

Question 25

A transfer of contractual duties by an obligor to another party for performance is called a(n)________.

A) accord
B) assignment
C) delegation
D) satisfaction

Question 26

Approval clauses require that the ________ approve any assignment of a contract.

A) obligee
B) obligor
C) assignor
D) assignee

Question 27

The term ________ refers to a third party who is not in privity of contract but who has rights under the contract and can enforce the contract against the promisor.

A) third-party contractor
B) third-party assignee
C) sub-assignee
D) intended third-party beneficiary

Question 28

A donee third-party beneficiary has the right to sue the ________ for nonperformance.

A) creditor beneficiary
B) promisor
C) promisee
D) incidental beneficiary

Question 29

Which of the following is a duty that can be delegated despite an anti-delegation clause?

A) need of unique expertise
B) exercise of personal skills
C) payment of money
D) requirement of subjective discretion

Question 30

When a person enters into a contract with the intent to confer a gift to an intended third party,the contract is called a ________ contract.

A) substituted
B) delegated
C) donee beneficiary
D) novation

Question 31

A(n)________ refers to a contracting party who directs that the benefit be conferred on another person.

A) assignee
B) promisor
C) promisee
D) donee beneficiary

Question 32

A(n)________ is an original creditor who becomes a beneficiary under the debtor's new contract with another party.

A) donee beneficiary
B) creditor beneficiary
C) incidental creditor
D) subsequent assignee

Question 33

In a delegation,the party to whom a duty is owed is the ________.

A) delegator
B) delegatee
C) obligor
D) obligee

Question 34

Nancy owes $5,000 to Kenneth and promises to pay it after two months.Kenneth assigns his right to collect the money to Delmar,who does not inform Nancy,for a payment of $3,500.After a few weeks,in need of money,Kenneth assigns the rights to Kelly,for a payment of $3,000.Kelly notifies Nancy of their agreement.According to the English rule,________.

A) Kelly can recover the money from Nancy
B) Kenneth has the right to sue Delmar for nonperformance
C) Nancy owes the money to Delmar
D) Kenneth has the right to recover the money directly from Nancy

Question 35

Which of the following is used to resolve a case where the obligee fraudulently makes successive assignments of the same right to several assignees?

A) the English rule
B) the no contact rule
C) the exclusionary rule
D) the gag rule

Question 36

Which of the following does the English Rule for successive assignments provide?

A) The first assignment in time prevails, regardless of notice.
B) The first assignment in time prevails, pending notice.
C) The first assignee to give notice to the obligor prevails.
D) The first assignee who receives a tangible token prevails.

Question 37

If the delegation is a declaration of duties,the delegatee ________.

A) cannot perform the duties of a delegator
B) is legally responsible for the satisfaction of the contract
C) is not liable to the obligee for nonperformance
D) can be sued for negligent performance

Question 38

A(n)________ occurs when there is a transfer of both rights and duties under a contract.

A) assignment and delegation
B) declaration of duties
C) assumption of duties
D) discharge

Question 39

Where there is a valid delegation of duties but the delegatee has not assumed the duties under a contract,the delegation is called a(n)________.

A) condition precedent
B) declaration of duties
C) express condition
D) discharge

Question 40

Which of the following is an illustration of the possession of tangible token rule?

A) An obligee who is owed $10,000 assigns the right of collection $5,000 each to two assignees.
B) The right of collecting a debt is recorded in the assignee's savings account passbook.
C) The assignee can re-assign the right only to a sub-assignee selected by the obligee.
D) An obligee cannot assign a right to collection of more than once.

Question 41

Which of the following is true about accord and satisfaction?

A) It usually arises in settlement of a dispute under the original contract.
B) It brings a new third party into the contract.
C) It discharges the original contract's duties upon reaching the accord.
D) It cannot be enforced by a party in the contract.

Question 42

A(n)________ is a clause in a contract in which the parties specify certain events that will excuse nonperformance.

A) approval clause
B) novation agreement
C) force majeure
D) implied-in-fact condition

Question 43

________ refers to a condition that requires the occurrence of an event before a party is obligated to perform a duty under a contract.

A) Condition precedent
B) Condition subsequent
C) Concurrent condition
D) Implied condition

Question 44

Which of the following refers to an agreement that substitutes a new party for one of the original contracting parties and relieves the existing party of liability on the contract?

A) a novation
B) a substituted contract
C) a mutual rescission
D) an accord

Question 45

KnockKnock is a manufacturer of stainless-steel locks which are well known for their durability.The company contacts a new supplier and forms a supply contract.The contract states that KnockKnock would only purchase steel from the supplier if the material supplied was high-grade Type 102 stainless steel.This is an instance of a ________.

A) condition subsequent
B) concurrent condition
C) covenant
D) condition precedent

Question 46

In which of the following conditions is a party's absolute duty to perform conditioned on the other party's absolute duty to perform?

A) condition precedent
B) condition subsequent
C) concurrent condition
D) implied condition

Question 47

Lionel Richmond is a soccer player who has a six-year contract with the Christshire United soccer team.Two years into the contract,he meets with an accident which results in the complete amputation of his right leg.Richmond is discharged from further performance of the contract by ________.

A) novation
B) substituted contract
C) accord and satisfaction
D) discharge by impossibility

Question 48

According to the accord and satisfaction agreement,the duties under the original contract is discharged when the ________.

A) parties do not agree to the accord
B) alternative contract is not satisfied
C) original contract is suspended
D) accord is performed

Question 49

________ is a subjective test that applies to contracts involving individual taste and comfort.

A) Reasonable person test
B) Personal satisfaction test
C) Express condition test
D) Cognitive inventory test

Question 50

________ is an objective test that applies to commercial contracts and contracts involving mechanical fitness.

A) Reasonable person test
B) Personal satisfaction test
C) Express condition test
D) Cognitive inventory test

Question 51

James hires Franco for a painting job.Their contract explicitly states that Franco's employment can be terminated if he is employed by another party during the contract period.Two weeks into the job,James finds out that Franco is also working for a painting agency two blocks away and terminates his employment.This is an instance of ________ terminating the contract.

A) condition precedent
B) condition subsequent
C) concurrent condition
D) implied condition

Question 52

An agreement whereby parties agree to accept something different in satisfaction of the original contract is called a(n)________.

A) accord
B) discharge
C) novation
D) accommodation

Question 53

A contract between a retailer and a supplier provides that payment is due upon delivery of goods by the supplier.The retailer's duty to pay and the supplier's duty to deliver constitutes ________.

A) an implied condition
B) a condition precedent
C) a condition subsequent
D) concurrent conditions

Question 54

The injured party loses the right to sue if the lawsuit is brought after the ________ expires.

A) privity of contract
B) notice of assignment
C) future right
D) statute of limitations

Question 55

Which of the following phrases describes the term "covenant"?

A) an unconditional promise to perform
B) a breach of contract
C) mutual rescission of a contract
D) successive assignments of a right

Question 56

When the government enters into a contract on behalf of a taxpayer,the taxpayer is typically a(n)________.

A) incidental beneficiary
B) promisee
C) donee beneficiary
D) promisor

Question 57

Which of the following is true of discharge of performance by agreement?

A) A partially executed contract cannot be rescinded.
B) Mutual rescission requires parties to enter into a second agreement that expressly terminates the first one.
C) A party is allowed to rescind a contract without the consent of the other party.
D) Unilateral rescission is not regarded as breach of contract.

Question 58

Which of the following is true about a substituted contract?

A) The prior contract can be enforced against a breaching party of a substituted contract.
B) A nonbreaching party can sue to enforce its terms against the breaching party.
C) Parties in the contract are not liable for nonperformance.
D) The contract substitutes a third party for one of the original parties.

Question 59

Which of the following is true of covenants and conditions?

A) A covenant is a conditional promise to perform.
B) A condition becomes a covenant if the condition is met.
C) A contract cannot contain conditions to excuse performance.
D) A party cannot sue over breach of a covenant by the other party.

Question 60

________ refers to a condition whose occurrence or nonoccurrence of a specific event automatically excuses the performance of an existing contractual duty to perform.

A) Condition precedent
B) Condition subsequent
C) Concurrent condition
D) Implied condition

Question 61

There are exceptions to assigning the right to sue a contracted party legally.

Question 62

The unconditional assignment of a contract right extinguishes all of the assignee's rights from the contract.

Question 63

An intended third-party can benefit from a contract but cannot legally hold a contracted party liable for its performance.

Question 64

Contracts that require work to be judged by a third person typically are judged by the reasonable person test.

Question 65

It is legal for some contracts to contain clauses that require the obligor to approve any assignment of the contract.

Question 66

It is illegal for a contract to have more than one condition to trigger or excuse performance.

Question 67

An obligor has the rights to receive the performance under a contract.

Question 68

An incidental beneficiary can hold the parties to a contract legally liable for not rendering performance.

Question 69

Irrespective of the form of delegation,a delegator remains legally liable for the performance of the contract.

Question 70

In case of a condition precedent,if the event does not occur,no duty to perform the contract arises.

Question 71

A contracting party's legal obligation to perform the duties specified in the contract can be discharged by the operations of law.

Question 72

Third parties cannot acquire any rights under other people's contracts at any time.

Question 73

A direct beneficiary to a contract can lawfully assign his or her expected future rights to an assignee.

Question 74

The Restatement (Second)of Contracts eliminates the distinction between conditions precedent and conditions subsequent.

Question 75

A creditor beneficiary contract usually arises when the original creditor assigns his or her rights to receive a performance to an intended third party.

Question 76

In the United States,the contract rights for payment of money can be assigned to third parties.

Question 77

If an assignee fails to provide a notice of assignment,the obligor cannot be sued for performing according to the original contract.

Question 78

A creditor beneficiary can enforce either the original contract against the original debtor-promisor or the new contract against the new debtor-promisor.

Question 79

The nonperformance of an unconditional promise to perform is not considered to be a breach of contract.

Question 80

The duties for which an obligee has a substantial interest in having an obligor perform cannot be transferred to a third party.