Question 1

When the performance of a contract depends on the personal skill of the obligor, a delegation of the duty is prohibited.

Accepted Answer

A) True 
 B)False

Question 2

Marlo and Nita enter into a contract for the sale of Marlo's apartment for which Nita agrees to pay $250,000. Nita assigns her right to buy the apartment to Owen. Owen is

Accepted Answer

A) the obligor. 
B) a third party beneficiary. 
C) the assignee. 
D) the assignor.

Question 3

In most states, the assignment of ownership rights in real estate cannot be prohibited because that would be contrary to public policy.

Accepted Answer

A) True 
 B)False

Question 4

Apps LLC enters into a contract with Birk, 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 app contract, Dave is

Accepted Answer

A) an intended beneficiary. 
B) an incidental beneficiary. 
C) a promisee. 
D) a promisor.

Question 5

Paolo borrows $5,000 from Quality Auto Sales to buy a car. When Paolo does not pay the loan or return the car, Quality wants to transfers 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 Paolo's consent? If so, and Quality committed fraud in the deal with Paolo, could Paolo legitimately refuse to pay Rapid? Explain.

Accepted Answer

The answer of Paolo borrows $5,000 from Quality Auto Sales...

Question 6

If a contract stipulates that it cannot be assigned, then it cannot be assigned unless the assignment

Accepted Answer

A) involves ownership rights in real estate. 
B) is contrary to public policy in most states. 
C) is pursuant to a contract for a sale of goods. 
D) operates only in favor of the concerned parties.

Question 7

Beta contracts to design and deliver marketing materials to Cesar. Beta cannot delegate this duty to Devon

Accepted Answer

A) if performance depends on Beta's personal skill. 
B) if the delegatee's performance will match the obligee's expectations. 
C) if special trust has not been placed in the obligor. 
D) under any circumstances.

Question 8

On a delegation of contract duties, the delegator is absolved from any liability for performance under the contract.

Accepted Answer

A) True 
 B)False

Question 9

If performance under a contract will vary materially on a delegation of its duties to a third party from that expected by the obligee, the delegation is

Accepted Answer

A) prohibited. 
B) permitted on sufficient notice by the obligor. 
C) permitted if the performance does not require the obligor's personal skill. 
D) permitted if special trust has been place in the obligor.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Lew and Mavis enter into a contract for the clearing and plowing of Mavis's 350-acre tract for which she agrees to pay $1,000. Lew transfers his duty under this contract to Nye. With respect to the duties under the original contract, this transfer

Accepted Answer

A) does not relieve Lew of the potential obligation to perform. 
B) extinguishes Lew's obligation to perform. 
C) is an invalid transfer of a non-transferable obligation. 
D) requires a special form to constitute a valid transfer.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

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 14

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

Accepted Answer

A) the obligor. 
B) a third party beneficiary. 
C) the assignee. 
D) the assignor.

Question 15

After a transfer to a creditor by an investor of a right to receive payments on a business loan, the creditor can demand those payments from the borrower.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

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

Question 17

A debt collector who is delegated the right to payments on a student loan owes no obligation to the debtor arising under the original terms of the loan.

Accepted Answer

A) True 
 B)False

Question 18

Ira owes Jess $1,000. Kerr owes Ira $1,000. Ira unconditionally assigns to Jess the right to Kerr's payment. Jess's right to the $1,000 is subject to the defenses that

Accepted Answer

A) Jess had against Ira. 
B) Kerr had against Ira. 
C) Ira had against Kerr. 
D) none of the choices.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

An investor cannot effectively object to the delegation of the selection of his or her investments under a contract with one financial advisor to another.

Accepted Answer

A) True 
 B)False

Exam 17: Third Party Rights

When the performance of a contract depends on the personal skill of the obligor, a delegation of the duty is prohibited.

Marlo and Nita enter into a contract for the sale of Marlo's apartment for which Nita agrees to pay $250,000. Nita assigns her right to buy the apartment to Owen. Owen is

In most states, the assignment of ownership rights in real estate cannot be prohibited because that would be contrary to public policy.

Apps LLC enters into a contract with Birk, 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 app contract, Dave is

If a contract stipulates that it cannot be assigned, then it cannot be assigned unless the assignment

Beta contracts to design and deliver marketing materials to Cesar. Beta cannot delegate this duty to Devon

On a delegation of contract duties, the delegator is absolved from any liability for performance under the contract.

If performance under a contract will vary materially on a delegation of its duties to a third party from that expected by the obligee, the delegation is

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

Lew and Mavis enter into a contract for the clearing and plowing of Mavis's 350-acre tract for which she agrees to pay $1,000. Lew transfers his duty under this contract to Nye. With respect to the duties under the original contract, this transfer

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

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

After a transfer to a creditor by an investor of a right to receive payments on a business loan, the creditor can demand those payments from the borrower.

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

A debt collector who is delegated the right to payments on a student loan owes no obligation to the debtor arising under the original terms of the loan.

Ira owes Jess $1,000. Kerr owes Ira $1,000. Ira unconditionally assigns to Jess the right to Kerr's payment. Jess's right to the $1,000 is subject to the defenses that

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

An investor cannot effectively object to the delegation of the selection of his or her investments under a contract with one financial advisor to another.