Deck 14: Third Party Rights and Discharge

Question 1

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

Answer 1

True

Question 2

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

Answer 2

False

Question 3

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

Answer 3

True

Question 4

Rights to receive funds can be assigned.

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

All rights can be assigned with no exceptions.

Question 20

Alienation is a transfer of land ownership.

Question 21

A contract is substantially performed when performance creates substantially the same benefits as those promised in the contract.

Question 22

Orchid and Peony enter into a contract for the sale of Orchid’s textbook at the end of the fall semester for which Peony agrees to pay Orchid $75. Peony wants to transfer her right to payment for the book to Queenie. This transfer is

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

Question 23

The most common way to discharge one's contractual duties is by breach of contract.

Question 24

Any breach allows the nonbreaching party to sue for damages.

Question 25

Any breach discharges the nonbreaching party from the contract.

Question 26

A material breach occurs when performance is substantial, but not complete.

Question 27

Carol takes out an insurance policy on her car. Carol can assign her policy to a third party

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

Question 28

A novation occurs when there is a substitution, by agreement, of a new contract for an old one, with the rights under the old one being terminated.

Question 29

A contract comes to an end when both parties fulfill their respective duties by performing the acts they have promised.

Question 30

After a contract is made, a supervening event may make performance impossible and discharge the contract.

Question 31

A novation requires the existence of a previous, valid obligation.

Question 32

A condition is a qualification in a contract based on a future event that is certain to occur.

Question 33

Revenue & Sales Corporation and Software Solutions, Inc., enter into a contract for the design of custom software for which Revenue & Sales agrees to pay $4,500. Software Solutions transfers the right to payment under the contract to Creditline Company. Creditline is

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

Question 34

John enters into a contract with Katie’s Coin-op 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 35

Most contracts need to be performed only to the satisfaction of a reasonable person unless they expressly state otherwise.

Question 36

A contract will be discharged if unforeseeable circumstances make it impossible to attain the contract's purpose.

Question 37

Courts may imply conditions from the purpose of a contract or from the intent of the parties.

Question 38

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

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

Question 39

Contracts that are executory on both sides can be rescinded by agreement.

Question 40

Subjective impossibility of performance can discharge a contract.

Question 41

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 42

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 43

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 44

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 45

Ed's Electric substantially performs its contract with Forest Hills Apartments, Inc., to deliver and install an alarm system and parking lot lighting. Forest Hills is entitled to​

A) ​damages.
B) ​nothing more.
C) ​to be excused from performance.
D) ​suspend performance.

Question 46

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 47

A contract between Laser Maintenance, Inc., and Medical Vision Operation Corporation 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 48

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 49

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 50

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 51

Stephanie enters into a contract to work as a lifeguard at Tim's Water Park for the summer in exchange for a weekly paycheck and free admission to the park's attractions. If the duties under this contract are discharged like those under most contracts, the duties will be

A) ​avoided.
B) ​breached.
C) ​performed.
D) ​rescinded.

Question 52

Even-Bilt Construction contracts to build a warehouse for Discount E-Sales Company. Even-Bilt completely performs. Discount E-Sales is entitled to

A) ​damages.
B) nothing more.
C) ​to be excused from performance.
D) ​suspend performance.

Question 53

Building Restoration, Inc. (BRI), enters into a contract to refurbish an old train depot for Casual Dining, Inc., to open as Eat Up Restaurant. If BRI completes most of the work promised in the contract, its performance will be

A) ​absolute.
B) ​complete.
C) ​material.
D) ​substantial.

Question 54

Kali contracts to sell Leony her car for $3,000. This contract will be fully discharged when Kali and Leony​

A) ​agree to sign a bill of sale.
B) ​exchange the car for the $3,000.
C) ​sign a receipt.
D) ​shake hands and go their separate ways.

Question 55

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 56

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 57

Opportunity Market Company (OMC) and Pierce enter into a contract for Pierce to cut and trim the landscaping around OMC's building before a meeting of the company's sales staff. When Pierce's schedule conflicts, he asks Rachel 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 58

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 59

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 60

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 61

Fact Pattern 14-1
Flora, who owns and operates Garden Fresh Organic Farms, agrees to sell Harvesters Grocery a minimum quantity of fresh fruits and vegetables every week for three months.
Refer to Fact Pattern 14-1.If Flora dies before the deliveries begin, her contract with Harvesters is

A) ​breached.
B) ​discharged.
C) ​not affected.
D) suspended.

Question 62

Gliding Light, LLC, and Hang Gliders, Inc., are parties to a contract. They subsequently agree that High Riders Inc. should take Gliding Light's place and assume all of its rights and duties under the contract. This is​

A) ​a mutual agreement to rescind.
B) ​an accord and satisfaction.
C) ​a novation.
D) ​a settlement agreement.

Question 63

Fact Pattern 14-1
Flora, who owns and operates Garden Fresh Organic Farms, agrees to sell Harvesters Grocery a minimum quantity of fresh fruits and vegetables every week for three months.
Refer to Fact Pattern 14-1.If a strike delays delivery of the produce beyond the time for performance, Flora's contract with Harvesters is

A) ​breached.
B) ​discharged.
C) ​not affected.
D) ​suspended.

Question 64

Fact Pattern 14-1
Flora, who owns and operates Garden Fresh Organic Farms, agrees to sell Harvesters Grocery a minimum quantity of fresh fruits and vegetables every week for three months.
Refer to Fact Pattern 14-1.If bad weather destroys Flora's crops, the obligation to deliver produce to Harvesters is

A) ​breached.
B) ​discharged.
C) ​not affected.
D) ​suspended.

Question 65

Omar and Penn want to discharge their contract by executing a new agreement with performance different from what they originally promised. They can best accomplish this by

A) ​a mutual agreement to rescind.
B) ​an accord and satisfaction.
C) ​a novation.
D) ​an alteration of the original contract.

Question 66

Drainage & Irrigation Equipment, Inc., contracts to sell its assets to Earth & Sky Aquatic Corpo­ration. Before either party has performed, rescission of this con­tract requires​

A) ​a mutual agreement to rescind.
B) ​an accord and satisfaction.
C) ​a novation.
D) ​a settlement agreement.

Question 67

If the market price for organic produce exceeds the price in the contract with Harvesters, and Flora decides not to deliver the order. her contract with the grocery is​

A) ​breached.
B) ​discharged.
C) ​not affected.
D) ​suspended.

Question 68

Renee contracts with Scott to pay him $25,000 for his work on Renee's new album "Hip Pop." After Scott performs, they sign an accord, in which Renee promises to pay him $21,000 within thirty days instead of $25,000 later. But she does not pay. Scott can sue Renee on​

A) ​neither the accord nor the original obligation.
B) ​the accord only.
C) ​the accord or the original obligation.
D) ​the original obligation only.

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

Quest Resources, Inc., contracts with Ring Communications Corporation (RCC) for RCC to design and build an all-weather communications sys­tem for Quest's field operations. RCC builds the system, but it func­tions effec­tively only in good weather. Is this a breach of the contract? If so, what remedies does Quest have?​

Question 71

Planners & Builders, Inc., enters into a contract with O'Reilly to refurbish a garage on his property as an auto repair shop. O'Reilly's neighbor Nora challenges the project as a violation of the local zoning laws. A court orders a halt to the project. O'Reilly's contract with Planners & Builders is​

A) ​breached.
B) ​discharged.
C) ​not affected.
D) ​suspended.

Question 72

Contractors Service, Inc., enters into a contract to build a restaurant for Dierdre's Soup Spoons Bistro with Dierdre's payment due on August 1. On August 1, her bank is closed, and for this reason, she claims that she cannot pay on time. In this situation​

A) ​Dierdre's bank is liable to Contractors Service.
B) ​Dierdre is in breach of contract.
C) ​the contract is discharged.
D) ​the contract is suspended.