Question 1

Which of the following is true?

Accepted Answer

A) A seller's duty to sell goods is discharged due to impossibility if the seller is unable to acquire the goods from its normal supplier. 
B) If a contract can be performed,but doing so has become illegal,performance will be discharged on the basis of impossibility. 
C) Death of a party will always result in discharge of that party's duties. 
D) A party can get out of a contract by destroying the subject matter of the contract.

Question 2

The release of one party to a contract and the substitution of another party for the released party is called:

Accepted Answer

A) A substitution by law. 
B) A summation. 
C) A novation. 
D) An adjudication. 
E) An accord and satisfaction.

Question 3

In general,an incidental beneficiary has no enforceable contract rights because she was not intended to have such rights.

Accepted Answer

A) True 
 B)False

Question 4

Conditions can be only:

Accepted Answer

A) Precedent. 
B) Subsequent. 
C) Precedent or subsequent. 
D) Precedent,subsequent,or concurrent. 
E) Precedent,subsequent,concurrent,or nominal.

Question 5

Betty has applied to General Motors to obtain a dealership in Smalltown.In order to be granted a dealership,Betty must have a showroom,so she contracts with Bob to buy a building that would be suitable for a showroom.Bob knows that Betty has applied for a dealership and he knows that Betty wants this building for an auto showroom.After the contract for the sale of the land and building is signed,but before the transaction is completed,Betty is notified that she will not receive the GM dealership.Betty refuses to pay for Bob's land and building.Bob sues.What results? What is Betty's best defense for not performing this contract?

Accepted Answer

The answer of Betty has applied to General Motors to...

Question 6

If a person assigns the same contract rights to more than one assignee,the majority of courts would decide that:

Accepted Answer

A) The first assignee to give notice would prevail. 
B) The first assignee to be assigned the rights would prevail. 
C) The first assignee to file a lawsuit would prevail. 
D) The first assignee to collect would prevail. 
E) The assignee who paid the most would prevail.

Question 7

Ralph Co.contracts to sell 500 televisions to Buyer.Ralph decides that it cannot fulfill its contract,so it transfers all its rights and duties to George Co.If George Co.fails to deliver the televisions as scheduled,then:

Accepted Answer

A) Buyer may sue and collect from Ralph only. 
B) Buyer may sue and collect from George only. 
C) Buyer may sue and collect from both George and Ralph. 
D) Buyer may sue and collect from either George or Ralph.

Question 8

A covenant is an unconditional promise to perform.

Accepted Answer

A) True 
 B)False

Question 9

Pete leases an apartment.The written lease agreement states that the lease is not assignable without consent of the landlord.Pete assigns his lease to his sister Paula,without the landlord's consent.In most states:

Accepted Answer

A) The assignment is invalid until the landlord consents,but the landlord must be reasonable in any decision to not consent. 
B) Paula now "stands in the shoes" of her brother and has succeeded to Pete's rights to occupy the apartment. 
C) Pete is no longer liable on the lease because he assigned it to Paula. 
D) Nonassignability clauses are unenforceable as being contrary to public policy.

Question 10

Cathy signed a contract on July 1 with the local Ford dealer to purchase a Ford Venus for $18,000.This car was supposed to be delivered on August 5.On July 15,Cathy's grandmother unexpectedly died,and left approximately $50,000 to Cathy.Cathy's car had not arrived at the dealer by August 5.On August 7,she decides that with her inheritance she would prefer a nicer car.She goes to the dealer on August 8 and is told that her Venus will be in the next day.She tells the dealer that she is upset that the car is not in and that she would prefer a Ford Muskrat,which is a luxury model.She and the dealer agree on a price of $42,000 for a Muskrat to be delivered by September 15.By September 20,the Muskrat has not arrived.Cathy starts thinking that it would be wiser to use her grandmother's inheritance to purchase a house.She goes to the dealer and says that she does not want the Muskrat,and that she will take the Venus,which is still in inventory,for the $18,000 previously agreed to.Can Cathy get out of the contract to purchase the Muskrat? Can she force the dealer to sell her the Venus for $18,000?

Accepted Answer

The answer of Cathy signed a contract on July 1...

Question 11

In a novation,both of the original parties are replaced by new parties.

Accepted Answer

A) True 
 B)False

Question 12

Duties under a contract:

Accepted Answer

A) Are freely assignable under all circumstances. 
B) Can be delegated,but only if there is a signed writing. 
C) May be delegated without assigning rights. 
D) May be delegated only if there is a corresponding assignment of rights.

Question 13

The rule on delegation says that duties involving the exercise of personal skills or expertise cannot be assigned.Given this,how can accounting firms,law firms,and consulting firms delegate their work to subordinates? In the case of CPA firms,the work is often delegated to someone who is not yet even a CPA.Clients of these firms often get upset when they find out that someone at the firm other than the person they dealt with personally is doing the work on their matter.In one of these firms,how could you prevent clients from getting upset about this?

Accepted Answer

The answer of The rule on delegation says that duties...

Question 14

Roger wants to buy a new car,so he borrows money from the bank.Several months later,he sells his car to Lisa,who agrees to pay the bank loan.

Accepted Answer

A) The bank is an intended third-party beneficiary. 
B) The bank is an incidental third-party beneficiary. 
C) Roger is an intended third-party beneficiary. 
D) Lisa is an intended third-party beneficiary. 
E) Lisa is an incidental third-party beneficiary.

Question 15

Because of the uncertainty that they add to contracts,conditions must be express.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is true?

Accepted Answer

A) An accord and satisfaction involves a new party,but a substituted contract does not. 
B) Both an accord and satisfaction and a substituted contract involve a new party. 
C) An accord and satisfaction discharges the duties under the original contract only when it has been performed,whereas a substituted contract discharges duties under the original contract upon formation of the substituted contract. 
D) A substituted contract can occur for any kind of contract,but an accord and satisfaction can be used only for contracts for the sale of goods.

Question 17

Which of the following events would probably excuse performance of a contract because of commercial impracticability?

Accepted Answer

A) The price of the commodity increases slightly so that the contract will not be as profitable. 
B) There is an unforeseeable trade embargo causing commodity prices to triple. 
C) The promisor of a personal service contract dies. 
D) The subject matter of the contract is destroyed by fire. 
E) The contract contains a time-is-of-the-essence clause.

Question 18

When there is a substituted contract,the discharge of the duties under the original contract occurs as soon as the substituted contract comes into existence.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is true about the similarities and differences between a substituted contract and a novation?

Accepted Answer

A) A novation must be in writing,but a substituted contract does not need to be. 
B) Neither will discharge duties under the original contract until the new contract is performed. 
C) A novation involves a new party,and a substituted contract is between the parties to the original contract. 
D) There is no difference because these are two terms to describe the same kind of contract. 
E) Both of these involve a new party who was not part of the original contract.

Question 20

The assignee of a legal right is subject to the same defenses as the assignor.

Accepted Answer

A) True 
 B)False

Exam 7: Third-Party Rights and Discharge

Which of the following is true?

The release of one party to a contract and the substitution of another party for the released party is called:

In general,an incidental beneficiary has no enforceable contract rights because she was not intended to have such rights.

Conditions can be only:

If a person assigns the same contract rights to more than one assignee,the majority of courts would decide that:

Ralph Co.contracts to sell 500 televisions to Buyer.Ralph decides that it cannot fulfill its contract,so it transfers all its rights and duties to George Co.If George Co.fails to deliver the televisions as scheduled,then:

A covenant is an unconditional promise to perform.

Pete leases an apartment.The written lease agreement states that the lease is not assignable without consent of the landlord.Pete assigns his lease to his sister Paula,without the landlord's consent.In most states:

In a novation,both of the original parties are replaced by new parties.

Duties under a contract:

Roger wants to buy a new car,so he borrows money from the bank.Several months later,he sells his car to Lisa,who agrees to pay the bank loan.

Because of the uncertainty that they add to contracts,conditions must be express.

Which of the following is true?

Which of the following events would probably excuse performance of a contract because of commercial impracticability?

When there is a substituted contract,the discharge of the duties under the original contract occurs as soon as the substituted contract comes into existence.

Which of the following is true about the similarities and differences between a substituted contract and a novation?

The assignee of a legal right is subject to the same defenses as the assignor.