Deck 15: Third Party Rights

Question 1

If a delegation of duties is enforceable, the obligee need not accept performance from the delegatee.

Answer 1

False

Question 2

The assignment of the same contract right to two different parties requires parallel and equal rights and obligations.

Answer 2

False

Question 3

In an assignment, the obligor is the person who to whom a duty, or obligation, is owed.

Answer 3

False

Question 4

Privity of contract establishes the basic concept that parties to a contract have privacy rights with respect to the terms.

Question 5

Until the obligor has notice of assignment, the obligor can discharge his or her obligation by performance to any party.

Question 6

In an assignment, the obligee is the person who is obligated to perform the duty.

Question 7

As long as the delegator expresses an intention to make the delegation, it is effective.

Question 8

If an assignment of a right changes a risk or duty, but not materially, that right cannot be assigned.

Question 9

A right cannot be assigned if the assignment will significantly alter the risks to, or the duties of, the obligor.

Question 10

As long as a contract is personal in nature, the right to receive those services can be assigned.

Question 11

An assignee obtains only those rights that the assignor originally had.

Question 12

Notice is legally necessary to establish the validity of an assignment.

Question 13

As a general rule, all rights can be assigned.

Question 14

The party receiving the assignment is the assignee.

Question 15

A transfer of contract rights to a third party is an incidental benefit .

Question 16

A contract stating that any assignment is void effectively prohibits the assignment of rights.

Question 17

Once the obligor receives proper notice, only performance to the assignee can discharge the obligor's obligation.

Question 18

If a statute expressly prohibits assignment, the particular right in question cannot be assigned.

Question 19

An assignee has a right to demand performance from the other original party to the contract (the obligor).

Question 20

Contract duties are not assigned-they are delegated.

Question 21

An "assignment of all rights" can create an assignment of rights but not a delegation of duties.

Question 22

The rights of a third party beneficiary under a contract vest if the third party materially changes his or her position in justifiable reliance on the promise.

Question 23

Delegation is prohibited when the duties are personal in nature.

Question 24

An intended third party beneficiary cannot enforce the contract against the original parties once the rights of the third party have vested.

Question 25

Expressly designating a third party as a beneficiary in a contract indicates whether the beneficiary is intended or incidental.

Question 26

An intended beneficiary can sue directly to enforce a promisor's promise.

Question 27

An incidental third party beneficiary cannot sue to enforce the contract because the benefit is unintentional.

Question 28

No contract can prohibit delegation of the duties of the contract.

Question 29

Steel, Inc., and Transport Company enter into a contract.  UniOil Corporation, which will indirectly benefit from the deal, is prevented from having rights under the contract by the principle of

A) assignment.
B) delegation.
C) privity.
D) vesting.

Question 30

Lance enters into a contract to mow Mary's yard every week for the summer. Mary sells her house and yard to Nora, and assigns the right to receive Lance's services to Nora. Mary is

A) the obligor.
B) the delegator.
C) the assignee.
D) the assignor.

Question 31

Faye makes and sells furniture. Faye and Glen enter into a contract for the delivery of Faye's products to Glen's Gear retail locations for which he agrees to pay the invoiced price. Faye transfers her right to payment under the contract to Haulers Trucking Company. This transfer is

A) a delegation .
B) an assignment.
C) a third party beneficiary contract.
D) prohibited.

Question 32

John enters into a contract with Katie's Laundry to move a suite of dryers from one of Katie's locations to another. John subsequently transfers this duty to Loren. Loren is

A) a delegatee.
B) an obligee.
C) an obligor.
D) an assignee.

Question 33

A creditor beneficiary cannot sue the promisor directly to enforce the contract.

Question 34

As a general rule, any duty can be delegated.

Question 35

Neither intended nor incidental beneficiaries acquire legal rights in a contract.

Question 36

A third party's right to control the details of performance of a contract indicates that the third party is an intended beneficiary.

Question 37

Mark and Nancy enter into a contract for the sale of Mark's apartment for which Nancy agrees to pay $100,000. Nancy assigns her right to buy the apartment to Owen. Owen is

A) the obligor.
B) the delegator.
C) the assignee.
D) the assignor.

Question 38

If a third party has the right to control the details of contract performance, the third party is an incidental beneficiary.

Question 39

If a contract requires that performance be rendered directly to a third party, the third party is an incidental beneficiary.

Question 40

A delegation relieves the delegator of the obligation to perform.

Question 41

Ian owes Jo $5,000. Jo assigns the right to this payment to Kyle. Notice by Jo to Ian of the assignment

A) must be given immediately .
B) must be given within thirty days.
C) must be given within a reasonable time.
D) is not required.

Question 42

Carol takes out an insurance policy on her truck, a Dodge pick-up. Carol can assign her policy to Elmer, who owns a Ford F-150,

A) under any circumstances .
B) under no circumstances .
C) as long as she does so in writing.
D) if Elmer agrees to the assignment.

Question 43

D'Alemberte contracts with Ellas to render personal nursing services for the benefit of Federica. This is

A) a delegation.
B) an assignment.
C) a third party beneficiary contract.
D) an implied contract.

Question 44

Elin owes Floyd $10,000. Floyd assigns the claim to Gary. Gary does not notify Elin of the assignment. A week later, Floyd assigns the same claim to Holly. Holly immediately notifies Elin of the assignment. Holly has

A) priority to payment in all states .
B) priority to payment in states that follow the English rule.
C) no priority to payment.
D) priority to payment in most states.

Question 45

Uri and Victor enter into a contract by which Uri promises to deliver business cards, advertising banners, and other marketing materials to Victor. Uri later transfers his duty under the contract to Wren. The delegator is

A) Uri.
B) Victor.
C) Wren.
D) none of the choices.

Question 46

Pico, a famous chef, agrees to give ten culinary lessons to Rhoda in exchange for $1,200. Pico's attempt to transfer his contract duties to Sven, an unknown sous-chef, will probably be

A) permitted because contracts may be freely delegated.
B) permitted because the contract is concerned with cookery.
C) prohibited because contracts may not be freely delegated.
D) prohibited if Pico and Sven have different skill levels.

Question 47

Retail Outlets LLC contracts with Smooth Paving Inc. to grade and pave a parking lot. The contract provides that it cannot be assigned without Retail's consent. Later, Smooth assigns the contract to Tough Road Company without obtaining Retail's consent. Retail could most successfully argue that the contract cannot be assigned because

A) the assignment is prohibited by statute.
B) the contract is personal.
C) the assignment will materially change a risk.
D) the contract prohibits assignment.

Question 48

Harry assigns his rights under a contract with Irma to his college roommate, Jake. Neither Harry nor Jake notifies Irma of the assignment. The assignment

A) will not be effective until notice is given to Irma.
B) will become effective after thirty days even if no notice is given to Irma.
C) is immediately effective.
D) is invalid.

Question 49

Ben and Cathy enter into a contract under which Ben agrees to cater Cathy's wedding. The contract expressly prohibits any transfer of rights without the assignee's consent. Cathy may transfer the right to receive Ben's services to her sister Diane

A) if Ben consents.
B) if Cathy decides to use a different caterer.
C) if Diane is also getting married.
D) under no circumstances.

Question 50

Music Masters Inc. and Nina enter into a contract for Nina to write a dozen songs for which Music Masters agrees to pay her. Nina transfers her right to payment under the contract to Omni Artists Agency. In the transfer of rights, the assignor is

A) Music Masters .
B) Nina.
C) Omni Artists.
D) both Nina and Omni Artists.

Question 51

Ira owes Jessie $1,000. Kerry owes Ira $1,000. Ira unconditionally assigns his rights to Jessie. Ira's right to the $1,000 is then

A) unchanged .
B) extinguished.
C) incidental.
D) in abeyance.

Question 52

Rachel and Stuart enter into a contract for the sale of Rachel's textbook at the end of the fall semester for which Stuart agrees to pay $75. Rachel wants to transfer her right to payment for the book to Terry. This transfer is

A) a delegation .
B) an assignment.
C) prohibited.
D) a third-party beneficiary contract.

Question 53

Bill and Charlene enter into a contract for the clearing, plowing, and preparing of Charlene's 100-acre tract for which she agrees to pay $1,000. Bill transfers his duty under this contract to Dewey. The delegatee is

A) Dewey .
B) Charlene.
C) Bill.
D) none of the choices.

Question 54

Ilene and Jerry enter into a contract under which Ilene agrees to provide groundskeeping services for Jerry's Family Fun Center. Under an anti-delegation clause, the contract can prohibit and prevent the transfer of

A) only duties that are personal in nature.
B) only duties that are impersonal in nature.
C) no duties under the contract.
D) all duties under the contract.

Question 55

Laramie contracts to provide cattle-herding services to Miles for $5,000 per month. Laramie cannot transfer this duty

A) under any circumstances.
B) without continuing to be potentially liable.
C) without Miles's consent.
D) without paying Miles at least one monthly fee.

Question 56

Leon contracts to install automatic watering troughs in Kendall's dairy barn. Leon then becomes seriously ill and contracts with Jake to install the troughs. Jake is unreliable and never shows up to install the troughs. In most states, Kendall can sue

A) no one .
B) Jake only.
C) Leon only.
D) Jake or Leon.

Question 57

Joy and Kris enter into a contract for Kris to lay sod in Joy's yard. When Kris's schedule conflicts, she contacts Lena, to whom Kris "assigns all rights under the contract." Kris is

A) no longer liable under the contract .
B) liable to Joy for breach of contract.
C) liable to Joy if Lena does not perform.
D) liable to Lena for inducing a prohibited contract.

Question 58

Market Company and Nick enter into a contract for Nick to cut and trim the landscaping around Market's building before a meeting of the company's sales staff. When Nick's schedule conflicts, he asks Otis to do the cutting and trimming. This transfer of duties is

A) a delegation .
B) an assignment.
C) a third party beneficiary contract.
D) prohibited.

Question 59

Beta Corporation and Code Inc. enter into a contract for the design of custom software for which Beta agrees to pay $5,000. Code transfers the right to payment under the contract to Debits LLC. Debits is

A) an obligor .
B) an assignee.
C) a third-party beneficiary.
D) a delegatee.

Question 60

A contract between Laser Equipment, Inc., and Medical Center contains a clause stating that any assignment is "void." This ordinarily prohibits

A) any assignment.
B) no assignment.
C) only an assignment of contract rights to personal services.
D) only an assignment that would change a risk.

Question 61

Lyle and Miranda agree that Lyle will fix the refrigeration unit in Miranda's Bagel Café in exchange for her payment of a debt that Lyle owes to New Credit Corporation. Under this contract, the intended beneficiary is

A) Miranda.
B) New Credit.
C) Lyle.
D) any customer of Miranda's.

Question 62

Pablo and Roth agree that Pablo will fix Roth's boat dock in exchange for $5,000. Pablo spends half of the amount due under the contract to acquire the materials for the job from Seaside Lumber. Seaside is

A) a delegatee.
B) an intended beneficiary.
C) an incidental beneficiary.
D) a primary beneficiary.

Question 63

Kent enters into a contract with Life Insurance Company for a policy that designates Mia as the beneficiary. Kent reserves the right to change the designated beneficiary. Mia's rights under the policy are

A) not affected by the reservation.
B) subject to any change that Kent makes.
C) subject to the first-in-time rule.
D) terminated by the reservation.

Question 64

Pam borrows $5,000 from Quality Auto Sales to buy a car.  When Pam does not pay the loan or return the car, Quality wants to transfer the right to the payment to Rapid Collection Agency. Rapid agrees to pay Quality for this right, but for a price that is less than the amount owed. Can Quality transfer this right to Rapid without Pam's consent? If so, and Quality committed fraud in the deal with Pam, could Pam legitimately refuse to pay Rapid? Explain.

Question 65

Business Loans, LLC, is a creditor beneficiary in a deal that involves Carla's Hair Salon and Dani's Nails. Like most creditor beneficiaries, Business Loans is

A) a donee beneficiary.
B) an incidental beneficiary.
C) an intended beneficiary.
D) an original contracting party.

Question 66

Fact Pattern 15-1 Restore Construction Company enters into a contract with Sam to remodel Tess's Home Store, using products from United Building Supplies.
Refer to Fact Pattern 15-1. United will realize a profit from the sale of products to Restore to remodel Tess's store. United is

A) a delegatee.
B) an assignee.
C) an incidental beneficiary.
D) an intended beneficiary.

Question 67

Fact Pattern 15-1 Restore Construction Company enters into a contract with Sam to remodel Tess's Home Store, using products from United Building Supplies.
Refer to Fact Pattern 15-1. Halfway through the project, Restore refuses to finish the job. The contract can be enforced against Restore by

A) Sam only.
B) Tess only.
C) Sam or Tess.
D) Sam and Tess.

Question 68

Hilda enters into a contract with Indemnity Insurance Company that designates Hilda's daughter Jackie as the beneficiary. Jackie's rights under the contract will vest

A) automatically.
B) never.
C) if Hilda attempts to change the beneficiary.
D) on the occurrence of the event for which the insurance was procured.

Question 69

A-One Landscapers, Inc., owes Friendly Finance Company $5,000.  A-One enters into a contract with Suburban Office Park under which A-One promises to maintain the landscaping on Suburban's property.  Under the contract, Suburban promises to pay Friendly Finance the amount that will be due A-One until A-One's debt to Friendly Finance is paid.  A-One performs as promised, but Suburban does not pay Friendly Finance.  Can Friendly Finance succeed in a suit against Suburban?  Why or why not?

Question 70

Apps LLC enters into a contract with Bart, the chief executive officer of Corporate Sales Inc., to create an app for the firm. To fulfill the contract, Apps hires Dave as a student intern. With respect to the contract, Dave is

A) an intended beneficiary.
B) an incidental beneficiary.
C) a delegatee.
D) an assignee.

Question 71

Rhea takes out a life insurance policy with Secure Insurance Corporation that names her spouse Tim as the beneficiary. This is

A) a delegation.
B) an assignment.
C) a third party incidental beneficiary contract.
D) a third party intended beneficiary contract.

Question 72

Molly is a third party beneficiary under a contract between Ned and Otis. Ned and Otis can modify or rescind their contract without Molly's consent

A) at any time.
B) at no time.
C) after Molly's rights have vested.
D) before Molly's rights have vested.