Deck 17: Third Party Rights

Question 1

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

Answer 1

False

Question 2

The assignment of the same contract right to two different parties automatically cancels both assignments.

Answer 2

False

Question 3

An assignee has a right to demand performance from the obligor.

Answer 3

True

Question 4

All rights can be assigned with no exceptions.

Question 5

An insurance policy is an example of a right that can be assigned.

Question 6

In an assignment, the assignee obtains only those rights that the assignor had.

Question 7

Rights to receive funds can be assigned.

Question 8

Giving notice is legally necessary to establish the validity of an assignment.

Question 9

A special form is required to create a delegation of duties.

Question 10

The person to whom rights in a contract are assigned is the assignor.

Question 11

In an assignment, the party assigning the rights to a third party is the assignee.

Question 12

Alienation is a transfer of land ownership.

Question 13

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

Question 14

As long as a contract is personal in nature, all rights under the contract can be assigned.

Question 15

In a bilateral contract, a party who makes a promise that benefits a third party is a promisor.

Question 16

Privity of contract establishes the basic concept that third parties have no rights in contracts to which they are not parties.

Question 17

An assignee's rights are subject to the defenses that the obligor has against the assignor.

Question 18

In most cases, a contract that prohibits its assignment cannot be assigned.

Question 19

Contract duties are not assigned-they are delegated.

Question 20

An assignment of rights in real estate often cannot be prohibited.

Question 21

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

Question 22

Lestor and MaryElise enter into a contract. Lestor agrees to mow MaryElise's yard every week for the summer. MaryElise is

A) ​the obligor.
B) ​the obligee.
C) ​the assignee.
D) ​the assignor.

Question 23

A creditor beneficiary is any third person who receives a benefit from a contract even though that person's benefit is not the reason the contract was made.

Question 24

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) ​alienation.

Question 25

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

Question 26

A delegation relieves the party making it of the obligation to perform.

Question 27

Both intended and incidental beneficiaries acquire legal rights in a contract.

Question 28

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) ​alienation.

Question 29

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

Question 30

Brock enters into a contract with Casey's Coin-op Laundry to move a suite of dryers from one of Casey's locations to another. Brock subsequently transfers this duty to Darin. Darin is

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

Question 31

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

Question 32

There are no exceptions to the rule that any duty can be delegated.

Question 33

​Expressly designating a third party as a beneficiary in a contract does not indicate whether the beneficiary is intended or incidental.

Question 34

All that a delegator needs to do to make a delegation effective is to express an intention to make the delegation.

Question 35

The rights of a third party beneficiary under a contract do not vest if the third party materially changes his or her position in justifiable reliance on the promise.

Question 36

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

Question 37

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

Question 38

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) ​an alienation.
D) ​a third-party beneficiary contract.

Question 39

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

Question 40

An "assignment of all rights" creates an assignment of rights and a delegation of duties.

Question 41

Eli owes Martin $10,000. Martin assigns the claim to Jack. Jack does not notify Eli of the assignment. A week later, Martin assigns the same claim to Allen. Allen immediately notifies Eli of the assignment. Allen

A) ​has priority to payment in all states.
B) ​has priority to payment in states that follow the English rule.
C) ​does not have priority to payment in any state.
D) ​has priority to payment in most states.

Question 42

D'Alemberte contracts with Elias 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 alienation.

Question 43

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

A) ​a delegator.
B) ​an assignor.
C) ​an obligor.
D) ​a third party beneficiary.

Question 44

Revenue & Sales Corporation and Software, Inc., enter into a contract for the design of custom software for which Revenue & Sales agrees to pay $64,500. Software transfers the right to payment under the contract to CreditLine LLC. CreditLine is

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

Question 45

​Gavin takes out an insurance policy on her car. Gavin can assign his policy to a third party

A) ​under any circumstances.
B) ​under no circumstances.
C) ​as long as he does so in writing.
D) ​if a court approves the assignment.

Question 46

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. Dewey is

A) ​a delegatee.
B) ​an assignee.
C) ​an obligee.
D) ​a delegator.

Question 47

Ilene and Jerry enter into a contract under which Ilene agrees to provide grounds keeping 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 48

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 the obligor's risk.

Question 49

Illya owes Jenny $1,000. In a separate deal, Kasey owes Illya $1,000. Illya unconditionally assigns his rights in the deal with Kasey to Jenny. Illya's right to the $1,000 is then

A) ​unchanged.
B) ​extinguished.
C) ​incidental.
D) ​assigned to a court.

Question 50

​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 51

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

A) ​absolved of any liability under the contract.
B) ​liable to Joy for breach of contract.
C) ​liable to Joy if Leza does not perform.
D) ​liable to Leza for inducing a prohibited contract.

Question 52

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. Kendall can sue

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

Question 53

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 54

Retail Outlets, Inc., contracts with Smooth Paving Inc. to grade and pave a parking lot. Smooth assigns the contract to Tough Road Company, which has a poor record of completing projects. Retail could most successfully argue that the contract cannot be assigned because

A) ​Retail did not consent to the assignment.
B) ​Retail did not receive adequate consideration for the assignment.
C) ​the assignment will materially increase the risk of nonperformance.
D) ​Tough Road was not an original party to the deal.

Question 55

​Phillip assigns his rights under a contract with Maria to his college roommate, Owen. Neither Phillip nor Owen notifies Maria of the assignment. The assignment

A) ​will not be effective until notice is given to Maria.
B) ​will become effective after thirty days even if no notice is given to Maria.
C) ​is immediately effective.
D) ​can be circumvented.

Question 56

Ben and Ivy enter into a contract under which Ben agrees to cater Ivy's wedding in exchange for a cash down payment. The contract expressly prohibits any transfer of rights. A contract right may be transferred, however, if the transfer involves

A) ​a right to receive payment.
B) ​a right to Ben's services.
C) ​rights under Ivy's insurance policy against Ben's failing to perform.
D) ​a right whose transfer is otherwise expressly prohibited by statute.

Question 57

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. Uri is

A) ​a delegator.
B) ​a delegatee.
C) ​an assignor.
D) ​an assignee.

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) ​alienation.

Question 59

Laramie contracts to provide cattle-herding services to Miles for $1,400 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 60

Marco and Fred enter into a contract for the sale of Marco's apartment for which Fred agrees to pay him $100,000. Marco cannot prohibit Fred from transferring his right to the ownership of the apartment because such a prohibition is

A) ​against public policy.
B) ​immoral.
C) ​unconscionable.
D) ​a crime.

Question 61

Hilda signs a contract with Indemnity Insurance Company that intentionally confers a benefit on Hilda's daughter Jackie as the designated beneficiary. Jackie's rights under the contract will vest

A) ​automatically.
B) ​if she demonstrates her consent to the promise at Hilda's request.
C) ​if Indemnity attempts to modify the terms of the contract.
D) ​on the occurrence of the event for which the insurance was procured.

Question 62

Delany & Sons, Inc., owes Evermore Bank $50,000. Delany enters into a contract with Floyd under which Delany promises to manage and oversee Floyd's Seaside Marina. Under the contract, Floyd promises to pay Evermore the amount that will be due Delany until his debt to Evermore is paid. Delany performs as promised, but Floyd does not pay the bank. Can Evermore succeed in a suit against Floyd? Why or why not?

Question 63

​Ozzie contracts for the sale of 500 shares of stock in Premium Quality, Inc., to Ray, with payment to go to Scholar University to pay Thalia's tuition. The contract reserves to Ozzie and Ray the right to modify its terms. Scholar's right to payment is

A) ​not affected by the reservation.
B) ​subject to any change that Ozzie and Ray make.
C) ​limited only if Thalia agrees to any changes.
D) ​terminated by the reservation.

Question 64

​Lyle and Miranda agree that Lyle will fix the refrigeration unit in Miranda's Buns n' Burgers in exchange for her payment of a debt that Lyle owes to New Credit Corporation. New Credit is

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

Question 65

Fact Pattern 17-1
Four-Square Construction Company enters into a contract with Ben to remodel Carol's Home Store, using products from Delta Building Supplies.
Refer to Fact Pattern 17-1. Halfway through the project, Four-Square refuses to finish the job. The contract can be enforced against Four-Square by

A) ​Ben only.
B) ​Carol's only.
C) ​Ben or Carol's.
D) ​none of the choices.

Question 66

App Developers, Inc. (ADI), enters into a contract with Carmen, the chief executive officer of SalesCorp, to create an app for the firm. To fulfill the contract, ADI hires Max and ten other student interns. With respect to the contract, Max is

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

Question 67

Logan borrows $150,000 from Ready Money Credit & Debit to buy new equipment for Logan's Steakhouse. When Logan does not pay the loan, Ready Money wants to transfers the right to the payment to Action Collection Agency. Action Collection agrees to pay Ready Money for this right, but for a price that is less than the amount owed. Can Ready Money transfer this right to Action Collection without Logan's consent? If so, and Ready Money committed fraud in the deal with Logan, could Logan legitimately refuse to pay Action Collection? Explain.

Question 68

Bea takes out a life insurance policy with Vida Insurance Corporation that names her spouse Wendell 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 69

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

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

Question 70

Fact Pattern 17-1
Four-Square Construction Company enters into a contract with Ben to remodel Carol's Home Store, using products from Delta Building Supplies.
Refer to Fact Pattern 17-1. Delta will realize a profit from the sale of products to Four-Square to remodel Carol's store. Delta is

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

Question 71

Mai is a third party beneficiary under a contract between Novia and Opie. Novia and Opie can modify or rescind their contract without Mai's consent

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