Deck 19: Third-Party Rights to Contracts

Question 1

Assignment of a contract that is personal in nature is generally permitted.

Answer 1

False

Question 2

Creditor beneficiaries can enforce their rights under a contract whenever the contract is valid.

Answer 2

True

Question 3

If a contract states "I assign all of my rights under the contract," in most cases the assignment will be considered an assignment of rights but not duties.

Answer 3

False

Question 4

In Australia a third party can sue for breach of contract.

Question 5

In order for an assignment to be valid, you must use an assignment form.

Question 6

Parties not in ________ usually do not have rights to a contract.

A) Acknowledged contract
B) Diverse contract
C) Privity of contract
D) Close contract
E) Privileged contract

Question 7

A third party who is intended to directly benefit from a contract made by two contracting parties is called an incidental beneficiary.

Question 8

There are two situations in which a third party gains rights to a contract: donee beneficiary and incidental beneficiary.

Question 9

When modifying its Civil Code, Russia duplicated the freedom of assignments found in the American Uniform Commercial Code.

Question 10

When an assignor transfers her rights to an assignee, the assignor legally gives up all rights to collect on a contract.

Question 11

Privity of contract is usually required in order for a party to be bound to a contract or have rights under a contract.

Question 12

Amy owned a condominium directly above Miguel. Amy failed to take proper care of some plumbing problems, and on several occasions, Amy's plumbing leaked into Miguel's apartment and caused property damage. Both Amy and Miguel had signed a condominium association agreement providing that each tenant would pay for any damage caused; that the agreement could be enforced by the management of the association or, in a proper case, by an aggrieved owner; and that adherence to the agreement was required "for the benefit of the Association and any person acquiring or owning an interest in the property." The association itself refused to sue Amy in order to recover damages to reimburse Miguel. Therefore, Miguel sued Amy himself. Amy claimed that Miguel had no standing to sue. Which of the following is the most likely result of the dispute if the court follows Allan v. Nersesova, the case in the text involving a similar issue?

A) That Miguel could proceed but only if he could convince the association to join its lawsuit with his.
B) That Miguel was an intended beneficiary of the agreement between Amy and the association, that he had standing to sue, and that under the terms of the agreement, the association's failure to act gave him the right to proceed.
C) That the agreement between Amy and the association addressed issues involving intentional wrongdoing, such as out-of-control parties, not issues involving utilities, and that Miguel, therefore, could not sue.
D) That Miguel was an intended beneficiary of the agreement between Amy and the association, but that he had no right to sue because he nevertheless lacked standing.
E) That Miguel had standing based on the association's failure to act, but that he nevertheless had no right to bring suit because he was not an intended beneficiary of the agreement between Amy and the association.

Question 13

Why do parties who are not in privity of contract usually not have rights to a contract?

A) Because of the statute of frauds.
B) Because contracts are private agreements between parties who each agree to give or do something for the other party.
C) Because it would be against public policy to provide rights to a contract to those without privity.
D) Because it would be too difficult to determine who has contractual rights if privity of contract is not required.
E) Because privity of contract is necessary to ensure a contract is in compliance with the UCC.

Question 14

A(n) ________ is a contractual party who agrees to receive something from the other party.

A) Obligor
B) Obligee
C) Assignor
D) Benefactee
E) Benefactor

Question 15

Most countries do not grant third-party rights to contracts.

Question 16

A donee beneficiary is a third party that benefits from a contract in which the promisor agrees to pay the promisee's debt in return for compensation plus interest.

Question 17

In determining whether a party is an incidental or intended beneficiary, one factor courts consider is whether the contract directly states that the third party is the benefiting party.

Question 18

A(n) ________ is a contractual party who agrees to do something for the other party.

A) Obligor
B) Obligee
C) Assignor
D) Benefactee
E) Benefactor

Question 19

A donee beneficiary is a type of incidental beneficiary.

Question 20

A creditor beneficiary is the third-party beneficiary who is in the strongest legal position to enforce a contract.

Question 21

Which of the following is NOT an example of contractual rights that cannot be assigned?

A) Rights that are personal in nature.
B) Rights whose assignment would increase the obligor's risk or duties.
C) Rights whose assignment is prohibited by contract.
D) Rights whose assignment is prohibited by public policy.
E) Rights to recover damages after a breach of contract.

Question 22

Lydia transfers her rights to a contract to Jamil, a third party. This is known as a(n) ________.

A) assignment
B) referral
C) disgorgement
D) privity
E) transfer

Question 23

Which statement below is NOT true with respect to the rights of an assignee and assignor?

A) Assignees essentially fill in for the assignor as the legal recipient of contractual duties.
B) Assignees acquire the same contractual duties that were held by the assignor.
C) Assignees are offered more protection than assignors.
D) The obligor may raise any of the same defenses for nonperformance against the assignee that he would have been able to raise against the assignor.
E) When an assignor transfers rights to an assignee, the assignor legally gives up all rights he or she previously had to collect on the contract.

Question 24

If Nadine and Luigi go to court to resolve their contract dispute and their contract has an antiassignment clause, how will the court generally treat the clause?

A) As an invalid clause because the courts do not believe in antiassignment clauses.
B) As clause against public policy.
C) As a set of promises.
D) As an invalid agreement under the statute of frauds.
E) As an effective clause as long as there is additional compensation paid by one of the parties.

Question 25

Theresa agrees to mow Huan's yard for $300 for the summer. Huan wishes to assign the contract to his grandmother. Theresa objects because Huan's yard is very small while his grandmother's yard is over an acre. Which of the following is the correct legal outcome for the dispute between Theresa and Huan?

A) Theresa will win because Huan's attempted assignment would increase the duties to which she agreed.
B) Theresa will win because all assignments are invalid without the obligor's consent.
C) Theresa will win unless Huan paid her the $300 in advance in which case Huan will win.
D) Huan will win because he may validly assign the contract without Theresa's consent.
E) Huan will win so long as he tells Theresa about the assignment prior to the time she begins any performance whatsoever.

Question 26

Sally and Matteo enter into a contract in which Matteo agrees to paint a picture of a ship and Sally promises to pay $100 to Matteo for the painting. Matteo paints the picture of a ship, but assigns the right to collect payment of the $100 to Felipe. Is Matteo's assignment legally valid?

A) Yes, because the right to payment can always be assigned.
B) Yes, because the contract was not one for personal services.
C) No, because the right to payment can never be assigned.
D) No, because the contract was one for personal service.
E) No, because it would increase the burden on Sally to pay Felipe instead of Matteo.

Question 27

William received an assignment of contractual rights from his uncle's contract. William would be considered a(n) ________

A) transferor
B) transferee
C) benefactor
D) assignee
E) assignor

Question 28

Which of the following is true of an attempt to assign the rights to payment?

A) The rights to payment can never be assigned.
B) The rights to payment can always be assigned.
C) The rights to payment can only be assigned if a contract is personal in nature.
D) The rights to payment can never be assigned if a contract is personal in nature.
E) The rights to payments can only be assigned if a contract is created under the statute of frauds.

Question 29

Carrie and Clayton enter into a contract. Carrie transfers her rights under the contract to Tamir. What is this transfer of rights called?

A) Assignment
B) Referral
C) Disgorgement
D) Privity
E) Transfer

Question 30

Which of the following is an exception to the general rule that rights to a contract cannot be assigned when a contract is personal in nature?

A) When the only part of a contract left to be fulfilled is the payment.
B) When nothing has been done on the contract at all.
C) When no more than half the contractual duties have been performed.
D) When no more than three-fourths of the contractual duties have been performed.
E) There is no exception because rights to a contract that is personal in nature may generally be assigned.

Question 31

What is the most likely outcome when an assignment is made in violation of an antiassignment clause?

A) The court will always prohibit assignment.
B) The court will never prohibit assignment.
C) The court will treat the assignment as a breach of contract.
D) The court will always allow assignment unless it is against public policy.
E) The court will refer to the statute of frauds to determine the effectiveness of the assignment.

Question 32

Ned and Trayvon enter into a contract for Ned to buy goods from Trayvon. The contract contains an antiassignment clause. Ned breaches the contract to pay for the goods after Trayvon delivers the items as required by contract. Trayvon does not want to sue for breach, so instead he assigns the right to pursue damages for breach of contract to Melissa. Is the assignment valid?

A) No, because the antiassignment clause prohibits the assignment.
B) No, because it would increase Ned's duties to have to pay Melissa.
C) Yes, but only if the assignment complies with the statute of frauds.
D) Yes, because antiassignment clauses do not affect the right to receive damages for breach of contract to sell goods or services.
E) Yes, because antiassignment clauses are no longer valid if any part of the contract is not performed.

Question 33

Which statement is true with respect to whether a contract may be assigned even in the presence of an antiassignment clause?

A) Assignments made by operation of law may be assigned, but no other assignments may be made in the presence of an antiassignment clause.
B) Assignments for the right to receive monetary payments may be assigned, but no other assignments may be made in the presence of an antiassignment clause.
C) Assignments made by operation of law, assignments for the right to receive monetary payments, and assignments for the right to receive damages for a breach of contract to sell goods or services may be assigned even in the presence of an antiassignment clause.
D) No contractual rights or duties may be assigned in the presence of an antiassignment clause.
E) Antiassignment clauses are void as against public policy and have no effect on the right of assignment.

Question 34

Jimmy and Penny enter into a contract. Jimmy transfers his rights under the contract to Luis. Jimmy is a(n):

A) Transferor
B) Transferee
C) Relator
D) Assignor
E) Assignee

Question 35

Jimmy and Penny enter into a contract. Jimmy transfers his rights under the contract to Luis. Luis is a(n):

A) Transferor
B) Transferee
C) Relator
D) Assignor
E) Assignee

Question 36

Hilda transfers her rights to a contract to George who is a third party. Hilda is known as the ________ and George is the ________.

A) transferor, transferee
B) transferee, transferor
C) creditor, debtor
D) assignor, assignee
E) assignee, assignor

Question 37

Gregory and Philip are contracting to buy and sell mortgages for their respective banks. In order to limit their ability to assign their rights under the contract, the parties will want to include a(n) ________

A) refusal to assign clause.
B) antiassignment clause.
C) no right to assign clause.
D) obligator deference clause.
E) limited liability clause.

Question 38

Which of the following is true regarding oral assignments?

A) In some cases, assignments may be made orally.
B) Assignments, regardless of the terms, are not covered by the statute of frauds.
C) The UCC requires that assignments be in writing when the amount being assigned is greater than $1,000.
D) The UCC requires that assignments be in writing when the amount being assigned in greater than $1,500.
E) The UCC requires that assignments be in writing when the amount being assigned is greater than $2,000.

Question 39

Quentin is contemplating assigning his rights under a contract to Bethel. Which form, if any, is required for an assignment to be valid?

A) No form is required.
B) UCC 4-350 Form.
C) Assignment Form 2-257.
D) IRS Form 5-959.
E) IRS Form 1040.

Question 40

Sally and Matteo enter into a contract in which Matteo, a professional painter, agrees to paint a picture of a ship and Sally promises to pay $100 to Matteo for the painting. Sally pays Matteo $100 but he delegates the painting job to his next door neighbor. Is Matteo's delegation legally valid?

A) Yes, because obligations under a contract can always be assigned.
B) Yes, because the contract was not one for personal services.
C) No, because obligations under a contract can never be delegated.
D) No, because the duties under the contract were personal in nature.
E) No, because it would increase the burden on Sally to pay Felipe instead of Matteo.

Question 41

Nadine is transferred the duty to paint an office building from Thomas. Nadine would be known as a(n) ________.

A) assignor
B) assignee
C) delegator
D) delegatee
E) benefactor

Question 42

Which rule affirms that in the case of multiple assignments of the same right, the first party granted the assignment is the party correctly entitled to the contractual right?

A) The first-assignment-in-time rule
B) The last-assignment-in-time rule
C) The English rule
D) The French rule
E) The American rule

Question 43

Gloria transferred her duty to perform under the contract she was in with Julia to Lydia who was not a part of the original contract. This is known as a(n) ________.

A) transfer of rights
B) an assignment of duties
C) a delegation of duties
D) performance of duties
E) transfer of duties

Question 44

The promisee in a third-party beneficiary contract is the party to the contract who ________ in exchange for the promise made to the third-party beneficiary.

A) receives a gift
B) obligates another party under the contract
C) owes something to the promisor
D) owes something to the third-party beneficiary
E) becomes a new assignor

Question 45

________ and ________ are types of intended beneficiaries.

A) Creditor, donee
B) Incidental, special
C) Incidental, required
D) Assignor, assignee
E) Benefactor, benefactee

Question 46

Leila and Bradford enter into a contract in which Bradford will pay Leila to mow his lawn and Leila will mow the lawn weekly. Leila has to move far away and cannot mow, but she transfers her duty to mow Bradford's lawn to Ursula. This is an example of:

A) Transfer
B) Assignment
C) Performance
D) Delegation
E) Unenforceable occurrence

Question 47

Jorge and Delinda decide to contract for bottled water. Delinda assigns her right to receive the proceeds of the bottled water contract to her friend Melody. When does an assignment become effective?

A) It would not be effective as rights to payments cannot be assigned.
B) When Melody receives notice she is receiving the payment rights.
C) Immediately upon the assignment.
D) After a reasonable delay to allow time for the obligor to object.
E) Five business days after the assignment being made.

Question 48

Simone assigned her rights under a contract to Juan. Forgetting that she took this action, she later assigns her rights under the contract to Kai. Both Juan and Kai try to claim the right to the contract. The state gives Juan the rights. Which rule did the state apply?

A) The English rule
B) The last-assignment-in-time rule
C) The first-assignment-in-time rule
D) The French rule
E) The American rule

Question 49

Kurt and Jennifer have an agreement that Jennifer will buy Kurt's house. Later, Jennifer verbally assigns the right to buy the house to Kristi, one of Kurt's former girlfriends. When Kristi shows up with the money, Kurt says "No way! You ditched me to date Rick. I'm not ever letting you get anything from me!" Which of the following is true in regard to the dispute between Kurt and Kristi?

A) Kristi can enforce the assignment only if the agreement that Kurt and Jennifer had was in writing.
B) Kristi can enforce the assignment.
C) Kristi cannot enforce the assignment because it was not in writing.
D) Kristi cannot enforce the assignment because Kurt did not specifically grant Jennifer the power to assign the contract.
E) Kristi cannot enforce the assignment because assignments to purchase property cannot ever be assigned for public policy reasons.

Question 50

Harold and Lloyd are in a contract to buy and sell machinery. Lloyd assigns his rights to Barbara without telling Harold. Harold finds out and objects. Which of the following is true regarding notice of an assignment in this case?

A) Harold is correct, notice is required for an assignment to be valid.
B) Assignments are not effective until notice is given so Harold would need to be notified before Lloyd could legally assign his right.
C) Notice is not required for a valid assignment, but is a good idea and Lloyd would be wise to notify Harold.
D) Harold is correct because notice of assignment must be provided in writing for an assignment to be valid.
E) Harold is correct because notice must be provided either in writing or orally for an assignment to be valid.

Question 51

What is one reason why the right to assign monetary payments cannot be denied?

A) Because denial of the right to assign monetary payments would be a violation of the statute of frauds.
B) Because denial of the right to assign monetary payments would be a violation of the UCC.
C) Because companies often transfer rights to payments in the regular course of business.
D) Because the doctrine of promissory estoppel guarantees the right to assign monetary payments.
E) Because privity of contract gives each party the right to assign monetary payments.

Question 52

Simone assigned her rights under a contract to Juan. Forgetting that she took this action, she later assigned her rights under the contract to Kai. Kai provided notice to the obligor of the assignment right away, but Juan never provided notice. The state gives Kai the rights. Which rule did the state apply?

A) The English rule
B) The last-assignment-in-time rule
C) The first-assignment-in-time rule
D) The French rule
E) The American rule

Question 53

Which of the following was the result in the case in the text Wesley Locke v. Ozark City Board of Education, in which an umpire was injured by an angry parent and sued, claiming that he was an intended third-party beneficiary of a contract between the defending Board of Education and the Alabama High School Athletic Association concerning police protection which the umpire claimed was required but not provided?

A) The umpire won as a matter of law because he was an intended third-party beneficiary to the contract between the defending school board and the athletic association, and the defendant had an absolute nondelegable duty to provide protection ensuring that no one was hurt.
B) The umpire won as a matter of law because although he was not an intended third-party beneficiary to the contract between the defending school board and the athletic association, the defendant had an absolute nondelegable duty to provide protection ensuring that no one was hurt.
C) The defending school board won as a matter of law because although the umpire was an intended third-party beneficiary to the contract, only the athletic association could proceed with a lawsuit.
D) The defending school board won as a matter of law because the umpire was not an intended third-party beneficiary to the contract.
E) The case was remanded for trial on the issue of whether adequate police protection was provided in view of the fact that the plaintiff was an intended third-party beneficiary to the contract between the school board and the athletic association.

Question 54

Which of the following is true regarding assignment of rights in China?

A) Free assignment of rights is permitted.
B) Free assignment of rights is permitted only when a contract with a state authority is involved.
C) Free assignment of rights is permitted only when a contract with a private party is involved unless the contract is one considered "for the good of the people."
D) Assignment of rights is illegal.
E) When a private party is involved, the assignor must first get the obligor's approval before an assignment is made.

Question 55

When two parties enter into a contract with the intended end purpose of benefiting a third party, a[n] ________ is created.

A) Third-party beneficiary
B) Second-party beneficiary
C) First-party beneficiary
D) Assignment
E) Creditor Beneficiary

Question 56

Luis contracts with Molly to wash her car and then delegates the duty to Paul. Paul fails to wash the car. Which of the following is true regarding Luis's duty to Molly, if any?

A) Luis has no duty to Molly so long as she did not expressly object to the delegation.
B) Luis has no duty to Molly regardless of whether she objected to the delegation.
C) Luis continues to be bound to Molly to see that her car gets washed.
D) Luis continues to be bound to Molly to see that her car gets washed only if the contract expressly prohibited delegation.
E) Luis continues to be bound to Molly to see that her car gets washed unless he already paid Paul for the job.

Question 57

Kelvin contracts with Anddy's Office Supplies to clean his store nightly. Kelvin gets really busy and transfers his duty to Xavier to clean the store. Kelvin is a ________

A) delegatee
B) delegator
C) assignor
D) assignee
E) transferor

Question 58

Barbara's parents take out a life insurance policy naming Barbara as the beneficiary. Barbara would be a[n] ________ beneficiary.

A) intended
B) incidental
C) preferred
D) donee
E) benefactor

Question 59

The party who makes the promise that benefits the third party is the ________ in a third-party beneficiary contract.

A) Promisee
B) Promisor
C) Obligor
D) Obligee
E) Assignor

Question 60

Which rule states that in the case of multiple assignments of the same right, the first assignee to give notice of assignment to the obligor is the party with rights to the contract?

A) The first-assignment-in-time rule
B) The last-assignment-in-time rule
C) The English rule
D) The French rule
E) The American rule

Question 61

Which factors are considered by a court in determining whether a party is an intended or incidental beneficiary?

A) Whether performance of the contract is done directly to the third party and whether the contract directly states that the third party is the benefiting party, but not the third party's ability to control the specifics of performance of the contract.
B) The third party's ability to control the specifics of performance of the contract, but not whether performance of the contract is done directly to the third party or whether the contract directly states that the third party is the benefiting party.
C) Whether the contract directly states that the third party is the benefiting party, but not the third party's ability to control the specifics of performance of the contract or whether performance of the contract is done directly to the third party.
D) Whether performance of the contract is done directly to the third party and the third party's ability to control the specifics of performance of the contract, but not whether the contract directly states that the third party is the benefiting party.
E) Whether performance of the contract is done directly to the third party, the third party's ability to control the specifics of performance of the contract, and whether the contract directly states that the third party is the benefiting party.

Question 62

In determining whether a person is an incidental or intended beneficiary, which of the following do courts consider?

A) The courts ask if a reasonable person in the position of the party in question would believe the contracting parties intended to benefit the party in question.
B) The courts ask if it is substantially certain that the contracting parties intended to benefit the party in question.
C) The courts ask if it can be proven beyond a reasonable doubt that the contracting parties intended to benefit the party in question.
D) The courts ask if the party in question paid something for the rights.
E) The courts ask if the party in question paid at least $500 for the rights.

Question 63

[Portraits] Tori, a famous portrait painter, agreed to paint Harry's portrait for $4,000. She also agreed to paint the portraits of Gabby's two Corgi dogs, Queenie and Prince. Gabby agreed to pay Tori $10,000 for the two Corgi portraits. Tori charged Gabby more because she met the spoiled dogs, and they really got on her nerves. Tori subsequently fell behind on finishing Harry's portrait, so she assigned the right to receive the money for the dog portraits to her assistant, Justin, and delegated the duty to Justin to paint the dog portraits. Justin eagerly accepted, and painted the portraits. Tori also assigned to Justin the right to receive payment from Harry to satisfy various payments she owed him for other duties. The contract Tori had with Gabby did not address assignment in any way. The contract Tori had with Harry, however, prohibited the right to assign payment for services received. Harry considered himself to be an experienced business person and insisted on that antiassignment clause because he had read somewhere that such a provision was a good idea. Tori finished the portrait of Harry and called him to come and pick it up. Meanwhile, a disgruntled secretary who disliked Tori told both Gabby and Harry about the assignments to Justin. Gabby was furious and refused to pick up the portrait or to pay anyone. Harry likewise refused to pay for his portrait.
What would be the most likely result if Tori sues Gabby for the $10,000 payment?

A) Tori will win only if Justin did a good job on the portraits.
B) Tori will win regardless of what type of job Justin did on the portraits so long as he was a qualified portrait painter.
C) Tori will win because Justin was employed as her assistant.
D) Tori will win because the contract did not contain an express provision prohibiting assignment or delegation of contractual rights and duties.
E) Gabby will win because the portrait was personal in nature and could not be delegated.

Question 64

The state of New York does not grant a donee beneficiary the right to enforce a contract unless the promisee is connected to the donee through a ________ relationship.

A) Valid
B) Recognized
C) Substantial
D) Familial
E) Marital

Question 65

When can an assignee decline an assignment?

A) If he declines in a timely fashion and has not agreed to the assignment.
B) If he declines within the time limit set by the UCC.
C) If he declines within the time limit set by the statute of frauds.
D) Only if the assignment would impose additional obligations.
E) Never.

Question 66

The Case Opener involved a lawsuit by fans seeking a refund based on the fact that the Tyson and Holyfield fight was stopped in the third round because Tyson bit off a piece of Holyfield's ear. What was the ruling of the court?

A) The fans were not allowed to recover because they were incidental beneficiaries.
B) The fans were not allowed to recover because they were donee beneficiaries.
C) The fans were not allowed to recover because they were assigned donees.
D) The fans were allowed to recover because they were creditor beneficiaries.
E) The fans were allowed to recover because they were intended third-party beneficiaries.

Question 67

A donee beneficiary may enforce rights under a contract only against the ________.

A) Promisee
B) Promisor
C) Obligor
D) Initial contracting parties
E) Assignee

Question 68

[Painted House] Jamal had a contract to paint Stephanie's house for $800. His contractual obligations included cleaning up any debris. The contract between Jamal and Stephanie did not in any way address assignment. Jamal, who was very busy, assigned the contract to Greg who was interested in making some extra money and had experience painting. Jamal specified that the contract included the duty to paint the house and the right to receive the money. Jamal did not tell Stephanie about the assignment because he did not want any trouble. Greg also did not mention the assignment to Stephanie. In fact, Greg never met Stephanie because he painted her house while she was at work. After Greg did a good job painting the house, Stephanie sent a check to Jamal for $800. Jamal needed the money to pay some bills, so he spent it. He thought he would have money coming in with which to pay Greg, but that did not happen. Greg asked Stephanie for $800 when it was not forthcoming from Jamal. Stephanie refused. Greg said that he was going to sue her. Stephanie called Jamal and told him that he had no right to assign the contract. In addition, there was another problem involving the disposal of debris. Although Greg was a good, competent painter, he forgot and left some old paint cans at Stephanie's house. Stephanie demanded that Jamal come and properly dispose of the paint cans because they could not simply be put in the trash. Jamal refused and told her that she would have to get Greg to dispose of the paint cans because that was his responsibility. Stephanie called Greg who told her that he was busy and that clearing out the paint cans was Jamal's responsibility.
Which statement is true regarding Jamal's claim that he had no duty to pick up the paint cans?

A) Jamal is correct because he validly delegated that duty to Greg.
B) Jamal is incorrect because the job was for the performance of a personal service, and he had no right to assign either rights or duties under the contract.
C) Jamal is incorrect, but only because the job was for under $1,000.
D) Jamal is correct only because Greg properly painted the house and was, therefore, responsible for ancillary obligations. If Greg had improperly painted the house, Jamal would have still had remaining duties.
E) Jamal is incorrect because his delegation did not affect his obligation to Stephanie. Normal 0 false false false EN-IN X-NONE X-NONE

Question 69

A third party who benefits from a contract in which the promisor agrees to pay the promisee's debt is a[n] ________ beneficiary.

A) Creditor
B) Donee
C) Incidental
D) Promised
E) Avowed

Question 70

A[n] ________ beneficiary is a third party who benefits from a contract in which the promisor agrees to give a gift to the third party.

A) Creditor
B) Donee
C) Incidental
D) Promised
E) Avowed

Question 71

Which of the following is a true statement regarding an assignee's acceptance of assigned rights?

A) A creditor beneficiary must accept assignment of rights, but there is no requirement that a donee beneficiary do so.
B) A donee beneficiary must accept assignment of rights, but there is no requirement that a creditor beneficiary do so.
C) An assignee must agree to accept assigned rights, and there is a strict protocol for doing so.
D) An assignee may decline an assignment if he has not agreed to it and declines in a timely fashion after learning of it.
E) An assignee may only decline an assignment if a delegation of duties is also involved.

Question 72

[Portraits] Tori, a famous portrait painter, agreed to paint Harry's portrait for $4,000. She also agreed to paint the portraits of Gabby's two Corgi dogs, Queenie and Prince. Gabby agreed to pay Tori $10,000 for the two Corgi portraits. Tori charged Gabby more because she met the spoiled dogs, and they really got on her nerves. Tori subsequently fell behind on finishing Harry's portrait, so she assigned the right to receive the money for the dog portraits to her assistant, Justin, and delegated the duty to Justin to paint the dog portraits. Justin eagerly accepted, and painted the portraits. Tori also assigned to Justin the right to receive payment from Harry to satisfy various payments she owed him for other duties. The contract Tori had with Gabby did not address assignment in any way. The contract Tori had with Harry, however, prohibited the right to assign payment for services received. Harry considered himself to be an experienced business person and insisted on that antiassignment clause because he had read somewhere that such a provision was a good idea. Tori finished the portrait of Harry and called him to come and pick it up. Meanwhile, a disgruntled secretary who disliked Tori told both Gabby and Harry about the assignments to Justin. Gabby was furious and refused to pick up the portrait or to pay anyone. Harry likewise refused to pay for his portrait.
What would be the most likely result if Justin sues Gabby for the $10,000 payment?

A) Justin will win only if Justin did a good job on the portraits.
B) Justin will lose because Gabby's only obligation is to pay Tori.
C) Justin will win unless Gabby can prove that Justin knew that she did not want him to do the portraits.
D) Justin will lose unless Justin can prove that he was unaware that Gabby did not want him to do the portraits.
E) Gabby will win because the portrait was personal in nature and could not be delegated.

Question 73

[Portraits] Tori, a famous portrait painter, agreed to paint Harry's portrait for $4,000. She also agreed to paint the portraits of Gabby's two Corgi dogs, Queenie and Prince. Gabby agreed to pay Tori $10,000 for the two Corgi portraits. Tori charged Gabby more because she met the spoiled dogs, and they really got on her nerves. Tori subsequently fell behind on finishing Harry's portrait, so she assigned the right to receive the money for the dog portraits to her assistant, Justin, and delegated the duty to Justin to paint the dog portraits. Justin eagerly accepted, and painted the portraits. Tori also assigned to Justin the right to receive payment from Harry to satisfy various payments she owed him for other duties. The contract Tori had with Gabby did not address assignment in any way. The contract Tori had with Harry, however, prohibited the right to assign payment for services received. Harry considered himself to be an experienced business person and insisted on that antiassignment clause because he had read somewhere that such a provision was a good idea. Tori finished the portrait of Harry and called him to come and pick it up. Meanwhile, a disgruntled secretary who disliked Tori told both Gabby and Harry about the assignments to Justin. Gabby was furious and refused to pick up the portrait or to pay anyone. Harry likewise refused to pay for his portrait.
What would be the most likely result if Justin sues Harry for the $4,000 payment?

A) Harry will win because he did not expressly agree to the assignment.
B) Justin will win because the right to receive payment could be validly assigned.
C) Justin will win unless Harry can prove that Justin knew that Harry did not want the benefits assigned.
D) Justin will lose unless Justin can prove that he was unaware that Harry did not want the benefits assigned.
E) Harry will win because the portrait was personal in nature and payment for it could not be assigned.

Question 74

Which of the following is true regarding the rights of an incidental beneficiary to a contract to sue to recover incidental rights?

A) An incidental beneficiary may sue to enforce incidental contractual rights so long as those rights have vested.
B) An incidental beneficiary may sue to enforce incidental contractual rights only if the incidental beneficiary was once a creditor beneficiary.
C) An incidental beneficiary may sue to enforce incidental contractual rights only if the incidental beneficiary was once a donee beneficiary.
D) An incidental beneficiary may sue to enforce incidental contractual rights only if the incidental beneficiary is also a second-party beneficiary.
E) An incidental beneficiary cannot sue to enforce a contract which provided incidental benefits.

Question 75

[Painted House] Jamal had a contract to paint Stephanie's house for $800. His contractual obligations included cleaning up any debris. The contract between Jamal and Stephanie did not in any way address assignment. Jamal, who was very busy, assigned the contract to Greg who was interested in making some extra money and had experience painting. Jamal specified that the contract included the duty to paint the house and the right to receive the money. Jamal did not tell Stephanie about the assignment because he did not want any trouble. Greg also did not mention the assignment to Stephanie. In fact, Greg never met Stephanie because he painted her house while she was at work. After Greg did a good job painting the house, Stephanie sent a check to Jamal for $800. Jamal needed the money to pay some bills, so he spent it. He thought he would have money coming in with which to pay Greg, but that did not happen. Greg asked Stephanie for $800 when it was not forthcoming from Jamal. Stephanie refused. Greg said that he was going to sue her. Stephanie called Jamal and told him that he had no right to assign the contract. In addition, there was another problem involving the disposal of debris. Although Greg was a good, competent painter, he forgot and left some old paint cans at Stephanie's house. Stephanie demanded that Jamal come and properly dispose of the paint cans because they could not simply be put in the trash. Jamal refused and told her that she would have to get Greg to dispose of the paint cans because that was his responsibility. Stephanie called Greg who told her that he was busy and that clearing out the paint cans was Jamal's responsibility.
Which of the following is true regarding Stephanie's statement to Jamal that he had no right to assign the contract?

A) Stephanie is correct because a personal service was involved.
B) Stephanie is correct because the contract did not specifically give Jamal the right to assign the contract.
C) Stephanie is correct because a delegation, as well as an assignment, was involved.
D) Stephanie is incorrect because the contract was not for the performance of a personal service, and there was no requirement that the contract specifically reference the right to assign rights and duties.
E) Stephanie is incorrect only because the contract and assignment were for an amount under $1,000. Otherwise, Jamal had no right to assign the contract without her permission.

Question 76

Raymond finds out that the city of Mornady has a contract with ACME company to pave the streets in front of his house. Paving the street will increase the value of his property. Raymond would be a[n] ________ beneficiary to the contract.

A) donee
B) creditor
C) incidental
D) accidental
E) negligent

Question 77

Although an intended beneficiary can enforce rights under a contract, they cannot do so until the right has ________.

A) gelled
B) completed
C) revamped
D) vested
E) finished

Question 78

[Painted House] Jamal had a contract to paint Stephanie's house for $800. His contractual obligations included cleaning up any debris. The contract between Jamal and Stephanie did not in any way address assignment. Jamal, who was very busy, assigned the contract to Greg who was interested in making some extra money and had experience painting. Jamal specified that the contract included the duty to paint the house and the right to receive the money. Jamal did not tell Stephanie about the assignment because he did not want any trouble. Greg also did not mention the assignment to Stephanie. In fact, Greg never met Stephanie because he painted her house while she was at work. After Greg did a good job painting the house, Stephanie sent a check to Jamal for $800. Jamal needed the money to pay some bills, so he spent it. He thought he would have money coming in with which to pay Greg, but that did not happen. Greg asked Stephanie for $800 when it was not forthcoming from Jamal. Stephanie refused. Greg said that he was going to sue her. Stephanie called Jamal and told him that he had no right to assign the contract. In addition, there was another problem involving the disposal of debris. Although Greg was a good, competent painter, he forgot and left some old paint cans at Stephanie's house. Stephanie demanded that Jamal come and properly dispose of the paint cans because they could not simply be put in the trash. Jamal refused and told her that she would have to get Greg to dispose of the paint cans because that was his responsibility. Stephanie called Greg who told her that he was busy and that clearing out the paint cans was Jamal's responsibility.
What would be the likely result of a lawsuit brought by Greg against Stephanie to recover the $800?

A) Greg will win because Stephanie accepted the risk that the contract would be assigned.
B) Greg will win only so long as Jamal has not been declared bankrupt because Stephanie will be able to recover the amounts at issue from Jamal.
C) Greg will win only so long as the assignment was for an amount under $1,000.
D) Stephanie will win because she had no notice that the contract had been assigned and could, therefore, legally satisfy her obligations by paying Jamal.
E) Stephanie will win only so long as the assignment was for an amount over $500.

Question 79

Halle and Rose enter into a contract in which Rose agrees to sell her property to Halle so Halle can build a hotel. Maria owns the restaurant next door and will benefit from the opening of the hotel because it will bring in many new customers. Rose subsequently breaches the contract so Halle cannot buy the property and build the hotel. Can Maria sue Rose for breach of contract?

A) Yes, because Maria was an intended beneficiary to the contract.
B) Yes, because Maria was an intentional beneficiary to the contract.
C) Only if Halle does not sue.
D) Only if Halle also sues.
E) No, because Maria was an incidental beneficiary to the contract.

Question 80

________ can enforce their rights under a contract whenever the contract is valid.

A) Creditor beneficiaries
B) Agents of beneficiaries
C) Valid beneficiaries
D) Assignee beneficiaries
E) Recognizable beneficiaries