Deck 17: Third Parties Contract Rights

Question 1

As a general rule,assignments that do not involve personal relationships or increase the promisor's burden are enforceable.

Answer 1

True

Question 2

Only specified individuals,and not members of the general public,can be incidental beneficiaries of contracts.

Answer 2

False

Question 3

Life insurance contracts give the insured the right to change the beneficiary only with the beneficiary's consent.

Answer 3

False

Question 4

Edward owes Frank $100,payable in six months.Frank,who is leaving the country on work,gives his rights to the payment to Marge for $80.Indicate the true statement about this case.

A)Frank is the obligor.
B)Edward owes Marge $80.
C)Edward owes Marge $100.
D)Frank will get $100 from Edward.

Question 5

Which of the following statements is true for assignment of contracts?

A)It represents the transfer of duties to assignees.
B)Rights cannot be sold in an assignment.
C)The assignee is not entitled to the entire performance the assignor had a right to under the original contract.
D)The promisor must render all performance to the assignee.

Question 6

According to courts today,an assignment of rights does not imply a delegation of duties.

Question 7

Employment contracts are assignable.

Question 8

To make a third party a donee beneficiary,the creation of a gift (intended for the third party)of the contracted performance must be the promisee's primary purpose in contracting.

Question 9

Transfer of rights is referred to as a(n):

A)assignment.
B)novation.
C)delegation.
D)third-party contract.

Question 10

Ronny contracted Smiths to supply a Cinderella dress for his niece,Lucie,on her birthday.Since the dress was intended for Lucie,Ronny cannot modify the contract without her consent.

Question 11

Annie buys a car from Honest Bob's Motors.She then sells the car to Michael,who agrees to make the remaining payments Annie owes Honest Bob's.Honest Bob's is a creditor beneficiary of Annie,and can therefore recover the balance due from her only,not Michael.

Question 12

The transfer of rights and duties under a contract is called an assignment.

Question 13

Persons who were not originally parties to a contract may claim some interest in it as assignees,or donee beneficiaries,or creditor beneficiaries.

Question 14

The creditor beneficiary has rights against the promisee,but not the promisor.

Question 15

Assignors who are paid for making an assignment are potentially liable to assignees for certain implied guarantees.

Question 16

A promisor who renders performance to the assignor without notice of the assignment still bears liability under the contract.

Question 17

The term delegation refers to the transfer of:

A)rights.
B)duties.
C)duties that a promisor did not want to perform.
D)duties involving the promisor's personal skills.

Question 18

Which of the following contracts can be assigned?

A)Assignment of future wages
B)Employment contracts
C)Contracts promising to deliver goods
D)Contracts involving personal rights

Question 19

Public policy can prevent the delegation of duties.

Question 20

An incidental beneficiary cannot enforce a contract.

Question 21

Carl is a doting father who wants to reward his son,Matt for graduating from college.Carl contracts with a local auto dealer to provide Matt with a new BMW.Under the contract,Carl promises to pay the dealer in exchange for the dealer's promise to deliver the car to Matt.The dealer then backs out of the deal and Matt wants to sue him.In this case:

A)Matt is a creditor beneficiary of the contract and can enforce it against the dealer.
B)Matt is a donee beneficiary of the contract and can enforce it against the dealer.
C)Matt is an incidental beneficiary of the contract and cannot enforce it against the dealer.
D)Matt cannot enforce the contract against the dealer because Carl's promise was gratuitous and therefore unenforceable.

Question 22

Delegations can be prohibited by:

A)the UCC.
B)the Restatement of Contracts.
C)public policy.
D)involvement of personal rights.

Question 23

Unless an assignment agreement clearly indicates a contrary intent,courts today tend to interpret assignments as including a delegation of the assignor's duties.A promise on the part of the assignee to perform these duties:

A)is not implicit.
B)is enforceable by either the promisor or the assignor.
C)depends on the policy followed by the public.
D)is not enforceable by the assignor.

Question 24

The promisor who delegates duties is ______ to the promisee if the party to whom the duties were delegated fails to satisfactorily perform them.

A)liable
B)not liable
C)liable for novation
D)liable to the assignee and not

Question 25

Which of the following is true for employment contracts?

A)They are assignable.
B)They are contrary to public policies.
C)They are nonassignable.
D)They involve the transfer of duties.

Question 26

A promisor who renders performance to the assignor without notice of the assignment:

A)is still liable under the contract.
B)has no further liability under the contract.
C)creates a novation.
D)cannot be sued for nonperformance.

Question 27

Rocky,who was voted the most valuable player of NYU's basketball team,can:

A)delegate his duties to another player.
B)cannot delegate due to public policy.
C)cannot delegate as they involved his personal skill.
D)assign his duties to another player.

Question 28

An assignor who assigns the contract will be relieved of the duty to perform to the other party on the original contract when:

A)the assignee gives notice to the other party.
B)there has been a novation of the original contract.
C)the assignee contracts to successfully perform the duties.
D)the contract of assignment explicitly states that the assignor is no longer liable to the other party.

Question 29

For an assigned claim to be valid:

A)the assignee must have the capacity to contract.
B)the contract must not be illegal or known by the assignor to be voidable.
C)the contract must have been discharged once prior to the assignment.
D)the assignee must have good title before the rights are assigned.

Question 30

Assignments of future wages are not effective because:

A)they involve personal relationships.
B)they are contrary to public policy.
C)they materially alter the duties of the promisor.
D)they involve personal rights.

Question 31

Zeta contracts to perform a violin solo for Pat.Zeta assigns the contract to Roy.Is this a valid delegation of duty?

A)There is no valid delegation of Zeta's duty to play because all delegations must be expressly stated in the assignment contract.
B)There is no valid delegation of Zeta's duty to play because the contract is one in which Zeta's personal skill as a musician is an essential part of the agreement.
C)There is a valid delegation of Zeta's duty as Zeta has entered into a novation with Roy.
D)There is a valid delegation of Zeta's duty because Zeta does not want to play for Pat.

Question 32

Assignees:

A)cannot enforce any rights of assignor against obligator.
B)cannot be liable for duties impliedly delegated with the assignment.
C)can sue the promisor for nonperformance.
D)can acquire greater rights than the assignor has.

Question 33

When a promisor appoints another person to perform their duties under a contract:

A)it is called an assignment.
B)it is called a delegation.
C)it creates an incidental beneficiary.
D)it creates a donee beneficiary.

Question 34

Creditor beneficiaries can:

A)sue both the promisor and promisee.
B)sue only the promisor.
C)sue only for payment of money.
D)sue in breach of insurance contracts.

Question 35

Notice to the promisor is important to address the issues of:

A)liability of the assignee.
B)priority only.
C)liability and priority.
D)validity of the assignment.

Question 36

Why are contracts prohibiting competition with a buyer of a business or an employer assignable?

A)To protect the goodwill of the business.
B)To protect the employees from losing their jobs.
C)To protect the interest of the public.
D)To protect the value of the assets to be sold.

Question 37

Once a donee or creditor beneficiary has accepted the contract,the original parties:

A)can cancel the contract if the original contract gives them the right to.
B)can cancel the contract without the third party's consent.
C)can never cancel the contract.
D)can cancel only monetary contracts.

Question 38

A donee beneficiary:

A)is a third-party beneficiary to whom a gift of performance is given.
B)is a third-party beneficiary who is no longer a part of an agreement.
C)is a third-party beneficiary who incidentally benefits from a contract.
D)is a third party beneficiary who cannot recover the value of the promised performance.

Question 39

Which of the following implied guarantee is made by assignors who are paid for making an assignment?

A)The assignor can enhance the value of the assignment.
B)The assignor has good title to the rights assigned.
C)The contract has been discharged two months prior to assignment.
D)Any written or oral statement representing the claim is genuine.

Question 40

In the will,Lydia's mother has named Lydia as the owner of her farm and named her as a beneficiary in her insurance policy.Lydia is:

A)a donee beneficiary.
B)an incidental beneficiary.
C)the assignee by novation.
D)a creditor beneficiary.

Question 41

If the promisor's performance will satisfy a legal duty that the promisee owes a third party,the third party is a(n):

A)donee beneficiary.
B)incidental beneficiary.
C)creditor beneficiary.
D)implied beneficiary.

Question 42

Ford owned an apartment complex and was converting the complex to a cooperative by selling individual units.Each purchaser was required to pay Ford an extra $30 per month for utilities,taxes,and insurance.Ford sold all his rights in the complex to Roberts and assigned the purchasers' contracts to him.Roberts failed to pay the applicable property tax,and Crowe,a purchasing tenant,sued him to compel payment of the tax.Roberts argued that in purchasing Ford's interest,all he bought was the right to collect the payments made by tenants and that he assumed no duties.Is Roberts liable for the property tax?

Question 43

An incidental beneficiary can:

A)sue for nonperformance.
B)acquire rights under the contract.
C)enforce the contract.
D)be a member of the general public.

Question 44

Explain what types of contracts are assignable and name the types of contracts that are not assignable.

Question 45

An underground water main burst in Manhattan and flooded the building where the Acme electric company has an electricity supply substation.A fire resulted and disrupted electric power for four days.This occurred during the biannual "Buyers Week" when merchandisers from around the world were in town to visit fashion showrooms and place orders for future seasons.Some 200 merchandisers brought suit against Acme.Some of the businesses had no direct contractual relationship with Acme.They argued that their lease agreements with their landlords,who were the direct contracting entities with Acme,obligated them to pay a share of the electricity expenses and therefore they could sue under the contracts between the landlords and Acme.Are they correct?

Question 46

What is an implied guarantee?

Question 47

The municipality of College Town enters into a contract with Streetz to have the town's roads repaired.Katie is a resident of College Town and is considered a(n):

A)donee beneficiary.
B)incidental beneficiary.
C)implied beneficiary.
D)creditor beneficiary.

Question 48

X,a builder,contracts with the city of Y to build a new convention center.Z,a hotel owner,stands to benefit once the convention center is built,so Z is angry when X backs out of the contract.Z wants to sue X.Can Z sue X?

A)Z is a creditor beneficiary and can sue X.
B)Z is a donee beneficiary and can sue X.
C)Z can sue X because Z is a citizen of Y,with whom X contracted.
D)Z is an incidental beneficiary and cannot sue X.

Question 49

Who is a creditor beneficiary? Can he/she enforce the contract?

Question 50

GP had been contracted by the city of Kingston to install a monitoring system at all public places.This was to be done in two phases and the city had the right to terminate the contract.GP had plans to use a subcontractor,Rex,whom they usually hired for the last phases of projects executed by them.After two weeks of the work,the city of Kingston found that things were not going properly and terminated GP's contract.Can Rex sue the city of Kingston?

A)Yes,because Rex is a third-party donee beneficiary.
B)No,because Rex is only an incidental beneficiary.
C)Yes,because Rex is involved in a novation.
D)No,because donee beneficiaries cannot enforce a contract.