Deck 15: Third-Party Rights and Discharge

Question 1

If a third-party beneficiary tries to enforce a contract,the promisor may use any defense against the third party that could have been used against the original promisee.

Answer 1

True

Question 2

In a contract,a party can be both an obligor and an obligee.

Answer 2

True

Question 3

Bill may assign his expected right to receive his inheritance from his grandmother Irma to John,his best friend.

Answer 3

False

Question 4

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

Question 5

Seller 1 contracts with Buyer to deliver 400 widgets.Seller 1 could fulfill this contract,but it assigns the benefits and delegates the duties of this contract to Seller 2,who accepts.If Seller 2 delivers the widgets that were contracted for,Buyer must accept and pay for them.

Question 6

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 a colleague,Frank who is a highly respected foot doctor.Since Joe chose a competent medical profession to do Missy's nose,the delegation is a valid one.

Question 7

Under an "assumption of duties" the delegatee is legally liable to the obligee for nonperformance.

Question 8

The party who is owed a right under the contract is called the assignor.

Question 9

Nor formalities are required for a valid assignment of rights.

Question 10

The American rule regarding successive assignment of rights is the majority rule.

Question 11

Under the American rule,when an assignor assigns the same right to more than one person,the first assignment in time prevails.

Question 12

Someone who owes a duty under a contract is an obligor.

Question 13

A clause that prohibits the assignment of rights under a contract is called a pro-assignment clause.

Question 14

The English rule regarding successive assignment of rights states that the first assignment in time prevails,regardless of notice.

Question 15

The state of an individual party being in a contract is known as privity of contract.

Question 16

The assignee of a legal right is subject to the same defenses as the assignor.

Question 17

Third parties never acquire rights under other people's contracts.

Question 18

Barney's assignment of his rights to be insured may not be assigned to Betty,as the assignment would materially alter the risk and duties of the insurance company.

Question 19

The parties to a contract can include an "anti-delegation clause" if they so chose.

Question 20

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

Question 21

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.

Question 22

A "force majeure clause" sets damages in advance for failure to perform.

Question 23

A debtor who files for bankruptcy and receives a discharge from the federal bankruptcy court is relieved of the legal liability to pay the debts.

Question 24

The reasonable person test is a subjective test that is used to judge contracts involving the mechanical fitness and most commercial contract.

Question 25

A contract for decorating someone's home that contains a personal satisfaction test would allow the homeowner to judge the satisfaction based on the homeowner's own personal tastes,so long as the homeowner acted in good faith.

Question 26

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

Question 27

When there is a substituted contract,the discharge of the duties under the original contract occurs as soon as the substituted contract comes into existence.

Question 28

The doctrines of commercial impracticality applies only to unforeseeable events.

Question 29

Because of the uncertainty that they add to contracts,conditions must be express.

Question 30

A new contract entered into by the parties that revokes and discharges a prior contract is known as mutual rescission.

Question 31

In a novation,both of the original parties are replaced by new parties.

Question 32

A condition concurrent is one that requires the occurrence of an event before a party is obligated to perform a duty under the contract.

Question 33

A donee beneficiary is someone who obtains rights under a contract without giving valuable consideration for those rights.

Question 34

An accord and satisfaction discharges the original contract upon the formation of the accord.

Question 35

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

Question 36

A unilateral rescission is effective in terminating a contract if done in good faith.

Question 37

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

Question 38

In general,an incidental beneficiary has no enforceable contract rights because she was not intended to have such rights.

Question 39

A covenant is an unconditional promise to perform.

Question 40

A contract cannot be based on the satisfaction of a third party,such as an engineer or architect.

Question 41

Which of the following duties cannot be delegated?

A) a surgeon's duty to do laser vision-correction surgery
B) a buyer's duty to purchase a house
C) a contractor's duty to repair a roof
D) a rancher's duty to deliver a quantity of beef

Question 42

A contract contains a clause that states,"no part of this contract may be assigned or delegated."

A) Generally,this clause is unenforceable.
B) Generally,this clause is enforceable.
C) Some courts would rule that if the duty is totally impersonal,such as the payment of money,the clause would be unenforceable.
D) A and C only are true.
E) B and C only are true.

Question 43

Regarding the assignment of contract rights,which of the following is true?

A) The party owed a particular right under a contract is called the obligee.
B) The party who owes the duty of performance is called the obligor.
C) The party who transfers his right to another is called the assignor.
D) A,B,and C are true.
E) A and B only are true.

Question 44

An unconditional promise to perform is known as a(n):

A) irrevocable offer
B) firm offer
C) covenant
D) estopped promise

Question 45

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

A) personal service contracts
B) assignments of future rights
C) contracts for the sale of goods
D) A and C only
E) A and B only

Question 46

Which of the following is true about the similarities and differences between a substituted contract and a novation?

A) A novation must be in writing but a substituted contract does not need to be.
B) Neither will discharge duties under the original contract until the new contract is performed.
C) A novation involves a new party,and a substituted contract is between the parties to the original contract.
D) There is no difference because these are two terms to describe the same kind of contract.
E) Both of these involve a new party who was not part of the original contract.

Question 47

An accord and satisfaction:

A) usually arises in settlement of a dispute under the original contract
B) involves a third party in the contract
C) discharges the original contract's duties upon reaching the accord
D) can come into existence even if only one party wants it

Question 48

Joan owes Richard money.Richard assigns his rights of collection to Steve.In this situation,which of the following is true?

A) Joan is the obligee.
B) Richard is the obligor.
C) Richard is the assignor.
D) A,B,and C are true.
E) A and B only are true.

Question 49

If a person assigns the same contract rights to more than one assignee,the majority of courts would decide that which of the following is true?

A) The first assignee to give notice would prevail.
B) The first assignee to be assigned the rights would prevail.
C) The first assignee to file a lawsuit would prevail.
D) The first assignee to collect would prevail.
E) The assignee who paid the most would prevail.

Question 50

Which of the following types of third-party beneficiaries can acquire enforceable rights under the original contract?

A) incidental,donee,creditor
B) incidental,donee
C) creditor only
D) donee only
E) creditor,donee

Question 51

The release of one party to a contract and the substitution of another party for the released party is called:

A) a substitution by law
B) a summation
C) a novation
D) an adjudication
E) an accord and satisfaction

Question 52

In an ordinary contract assignment,the assignee:

A) acquires the rights of the assignor,but nothing more
B) is released from liability
C) assumes the assignor's duty by operation of law
D) assumes no liability pursuant to the UCC

Question 53

Conditions can be only:

A) precedent
B) subsequent
C) precedent or subsequent
D) precedent,subsequent,or concurrent
E) precedent,subsequent,concurrent,or nominal

Question 54

Which of the following is true about personal satisfaction clauses in contracts?

A) These clauses are usually unenforceable due to their subjective nature.
B) Where the personal satisfaction depends on personal taste and comfort,an objective standard applies.
C) Personal satisfaction is always evaluated on a subjective basis.
D) Personal satisfaction cannot be based on the satisfaction of a third party.
E) In commercial contracts,such as building construction,personal satisfaction is evaluated on an objective basis.

Question 55

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

A) The rights can be assigned and the duties can be delegated.
B) The rights can be assigned and the duties can be delegated,but neither can occur without the other also occurring.
C) The rights can be assigned,but the duties cannot be delegated.
D) The rights cannot be assigned,but the duties can be delegated.
E) The rights cannot be assigned,nor can the duties be delegated.

Question 56

Commercial impracticability will sometimes excuse performance if an unforeseeable event makes it impractical for the promisor to perform.

Question 57

A transfer of some portion of a contract's rights and corresponding duties means that:

A) rights are assigned,duties are delegated
B) duties are assigned,rights are delegated
C) rights and duties are discharged
D) rights and duties are never permitted to be assigned

Question 58

Duties under a contract:

A) are freely assignable under all circumstances
B) can be delegated,but only if there is a signed writing
C) may be delegated without assigning rights
D) may be delegated only if there is a corresponding assignment of rights

Question 59

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

A) The donee beneficiary can sue the promisor to enforce the contract.
B) The donee beneficiary can sue the promisee to enforce the contract.
C) The donee beneficiary can sue either the promisor or the promisee to enforce the contract.
D) The donee beneficiary can sue neither the promisor nor the promisee to enforce the contract.

Question 60

The transfer of rights under a contract to a third party is called:

A) an assignment
B) an adjudication
C) a resolution
D) a delegation to an obligee

Question 61

The City of Monroe enters into an oral contract with Allied Construction Co.to pave a gravel road.The gravel road passes in front of John's home.Once the road is paved,John's home would increase significantly in value.Allied fails to pave the gravel road.If John sued Allied for breach of contract,then which of the following is true?

A) John would prevail,because John is an intended third-party beneficiary.
B) John would not prevail,because John is only an incidental third-party beneficiary.
C) John would prevail,because he is a party to the contract and has privity.
D) John would not prevail,because the Statute of Frauds applies.

Question 62

Luziva Co.enters into a contract to deliver 200 coats to Buyer.Luziva determines that it cannot honor the contract,so it assigns the contract to Maniva Co.Maniva Co.delivers the specified 200 coats to Buyer per the contract.Which of the following is true?

A) Buyer can refuse to accept the coats because its contract was with Luziva,not Maniva.
B) Buyer must accept the coats and pay Maniva Co.
C) Luziva Co. still must deliver the coats to Buyer because this contract cannot be assigned.
D) A and C only are true.

Question 63

Which of the following events would probably excuse performance of a contract because of commercial impracticability?

A) The price of the commodity increases slightly so that the contract will not be as profitable.
B) There is an unforeseeable trade embargo causing commodity prices to triple.
C) The promisor of a personal service contract dies.
D) The subject matter of the contract is destroyed by fire.
E) The contract contains a time-is-of-the-essence clause.

Question 64

Ralph Co.enters into an agreement to sell 500 computers to Buyer.Ralph decides that it cannot fulfill its contract so it transfers all its rights and duties under the contract to George Co.Which of the following is true?

A) The contract is unenforceable because this type of contract cannot be assigned.
B) This is an assignment.
C) This is a delegation.
D) This is an assignment and a delegation.
E) This is a novation.

Question 65

Roger contracted with Lori to produce a sculpture of her.The sculpture was to be made to Lori's satisfaction.Upon completion of the sculpture,which of the following is true?

A) Lori may refuse to accept the sculpture if she really does not like it.
B) Lori may refuse to accept the sculpture only if a reasonable person would not like it.
C) Lori may refuse to accept the sculpture if she cannot afford to pay for it.
D) Both B and C are correct.
E) Lori may not refuse to accept the sculpture.

Question 66

Ralph Co.contracts to sell 500 televisions to Buyer.Ralph decides that it cannot fulfill its contract,so it transfers all its rights and duties to George Co.If George Co.fails to deliver the televisions as scheduled,then which of the following is true?

A) Buyer may sue and collect from Ralph only.
B) Buyer may sue and collect from George only.
C) Buyer may sue and collect from both George and Ralph.
D) Buyer may sue and collect from either George or Ralph.

Question 67

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

A) The wife cannot sue the insurance company because she was not a party to the contract and does not have privity.
B) The wife can sue the insurance company because she was a party to the contract and does have privity.
C) The wife cannot sue the insurance company because she does not have an insurable interest in her husband.
D) The wife can sue the insurance company because she is a third-party beneficiary to this contract.

Question 68

The bank lends money to Jane to buy a car.After several months,Jane sells the car to Dan.Dan agrees to pay off the loan to the Bank.If Dan fails to pay the loan,then which of the following is true?

A) The bank may recover the amount due on the loan from Jane.
B) The bank may recover the amount due on the loan from Dan.
C) The bank may recover from either Dan or Jane.
D) The bank can repossess the car,but cannot collect money from anyone.

Question 69

Roger wants to buy a new car,so he borrows money from the bank.Several months later,he sells his car to Lisa,who agrees to pay the bank loan.Which of the following is true?

A) The bank is an intended third-party beneficiary.
B) The bank is an incidental third-party beneficiary.
C) Roger is an intended third-party beneficiary.
D) Lisa is an intended third-party beneficiary.
E) Lisa is an incidental third-party beneficiary.

Question 70

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?

A) The personal satisfaction test.
B) The reasonable person test.
C) The workmanlike construction test.
D) The third-party satisfaction test.
E) Either test A or B would produce the same results.

Question 71

Which of the following is true?

A) A seller's duty to sell goods is discharged due to impossibility if the seller is unable to acquire the goods from its normal supplier.
B) If a contract can be performed,but doing so has become illegal,performance will be discharged on the basis of impossibility.
C) Death of a party will always result in discharge of that party's duties.
D) A party can get out of a contract by destroying the subject matter of the contract.

Question 72

Pete leases an apartment.The written lease agreement states that the lease is not assignable without consent of the landlord.Pete assigns his lease to his sister Paula,without the landlord's consent.In most states,which of the following is true?

A) The assignment is invalid until the landlord consents,but the landlord must be reasonable in any decision to not consent.
B) Paula now "stands in the shoes" of her brother and has succeeded to Pete's rights to occupy the apartment.
C) Pete is no longer liable on the lease because he assigned it to Paula.
D) Non-assignability clauses are unenforceable as being contrary to public policy.

Question 73

A force majeure clause:

A) prohibits assignment of contract rights
B) creates a third-party beneficiary
C) excuses performance in the event of a natural disaster
D) requires that the performance meet the personal satisfaction of the promisee
E) operates as a delegation of duties

Question 74

Assume that the players on the Colorado Rockies baseball team breach their contract by refusing to play the remainder of their games in the season.A restaurant located near Coors Field,where the games would have been played,sues the players.As a result,which of the following is true?

A) The restaurant loses due to public policy.
B) The restaurant loses because it is not an intended beneficiary of the players' contract.
C) The restaurant wins as a third-party beneficiary.
D) The restaurant wins under promissory estoppel.

Question 75

Tenant has a lease on an apartment through December of the current year.Tenant and Newtenant go to Landlord to have Newtenant take over the lease through the end of December.Landlord agrees and releases Tenant from any responsibility under the lease.This is a(n):

A) substituted contract
B) accord and satisfaction
C) novation
D) mutual rescission

Question 76

Rebecca owes Ian $5,000.Ian needs money in a hurry so he assigns his right to collect from Rebecca to Janet for $4,500.Several days later,Ian assigns his right to collect from Rebecca to Kristin for another $4,500.Ian then leaves town.Kristin is the first to notify Rebecca of the assignment.In the majority of states,which of the following best describes this situation?

A) Rebecca need pay only Janet,since Janet was the first to receive the assignment.
B) Rebecca need pay only Kristin,since Kristin was the first to give notice to Rebecca.
C) Rebecca must pay both Janet and Kristin,since a valid assignment was made to each.
D) Rebecca need pay only Ian,since debts are not assignable.

Question 77

Homeowner enters into an agreement with Grasscutter to cut the grass at Homeowner's house.The contract says nothing about delegation or assignment.Grasscutter gets a friend,Lawnmower to do the actual work.Which is true?

A) This is a breach of the original contract because Grasscutter was the person hired.
B) This is an assignment by Grasscutter of his duty to cut the grass.
C) Because the contract does not mention assignment or delegation,Grasscutter cannot have someone else perform his duty.
D) Grasscutter can have Lawnmower do the work,but Grasscutter can be held responsible if Lawnmower does not do the work properly.

Question 78

Paragon Studios hires Harry Ford to play Indiana Bones in one of its new movies.Harry decides that he cannot fulfill this contract so he assigns his rights and delegates his duties under the contract to Tom Smellnik,another famous actor and friend of Harry.Which of the following best describes this situation?

A) Paragon Studios must accept Smellnik,so long as he is an equally capable actor.
B) Paragon Studios must accept Smellnik whether he is a good actor or not.
C) Ford may not delegate his duty under this contract.
D) Smellnik must accept this job because it was assigned to him.
E) A and D are true.

Question 79

Which of the following is true?

A) An accord and satisfaction involves a new party,but a substituted contract does not.
B) Both an accord and satisfaction and a substituted contract involve a new party.
C) An accord and satisfaction discharges the duties under the original contract only when it has been performed,whereas a substituted contract discharges duties under the original contract upon formation of the substituted contract.
D) A substituted contract can occur for any kind of contract but an accord and satisfaction can be used only for contracts for the sale of goods.

Question 80

Under a mutual rescission,the parties to a contract:

A) agree to new terms
B) involve a third party in the contract
C) agree to undo and cancel a contract
D) agree to perform a contract a second time under the same terms as the original