Deck 11: Third Party Rights and Discharge

Question 1

Contract duties are not assigned-they are delegated.​

Answer 1

True

Question 2

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

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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

Question 5

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

Question 6

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

Question 7

When a party's performance is perfect, it is said to be complete.​

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

All rights can be assigned with no exceptions.​

Question 13

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

Question 14

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

Question 15

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

Question 16

The most common way to discharge contractual duties is by breach of contract.​

Question 17

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

Question 18

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

Question 19

Rights to receive funds can be assigned.​

Question 20

In most contracts, promises of performance are not expressly conditioned.​

Question 21

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

Question 22

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

Question 23

If no time for performance is stated in a contract, a reasonable time is implied.​

Question 24

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 25

Performance can be accomplished by tender.​

Question 26

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 27

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 28

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 29

A contractual obligation may not be discharged through novation.​

Question 30

A discharge in bankruptcy will ordinarily allow a creditor to subsequently enforce the debtor's contract.​

Question 31

To rescind a contract, the parties must make a second agreement that satisfies the legal requirements for a contract.​

Question 32

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's transfer of her right to payment for the book to Terry is​

A) ​a delegation.
B) ​an assignment.
C) ​an alienation.
D) ​prohibited.

Question 33

When a contract party materially alters a written contract without consent, the other party must adapt his or her performance accordingly.​

Question 34

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

Question 35

The law allows an innocent party to be discharged when the other party has materially altered a written contract without consent.​

Question 36

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

Question 37

An occurrence or event that makes performance temporarily impossible operates to discharge the parties' contractual duties.​

Question 38

Any breach allows the nonbreaching party to sue for damages.​

Question 39

​Anything less than complete performance is a material breach of contract.

Question 40

An intentional failure to comply with the terms of a contract is not a breach.​

Question 41

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 42

State University provides housing on campus and in some adjacent off-campus neighborhoods. To lease a university house or apartment, a person must be student at State. This requirement is​

A) ​an implied condition .
B) ​a concurrent condition.
C) ​a condition subsequent.
D) ​a condition precedent.

Question 43

Fact Pattern 11-1
Medical Accounts Collection enters into a contract to employ Natalie as a billing and credit manager for two years. During the first year, Natalie is often absent without explanation and when present fails to adequately do her job.
Refer to Fact Pattern 11-1. Natalie's performance is most likely​

A) ​a material breach.
B) ​a minor breach.
C) ​a minimal breach.
D) ​no breach.

Question 44

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 45

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, his transfer of the duties of cutting and trimming to Otis is​

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

Question 46

Marco and Ned enter into a contract for the sale of Marco's apartment for which Ned agrees to pay him $100,000. Marco cannot prohibit Ned 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 47

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 48

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 49

Real Apps, Inc., enters into a contract with SalesCorp to create an app for the firm. To fulfill the contract, Real Apps hires Tad and ten other student interns. With respect to the contract between Real Apps and SalesCorp, Tad is​

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

Question 50

Ann offers to buy Beth's land only if an appraiser estimates that its current value is more than a certain price. Later, the appraiser deems the worth of the land to be less than Beth's price. Ann and Beth's obligations​

A) ​must still be performed.
B) ​must now be renegotiated.
C) ​are on "hold."
D) ​are discharged.

Question 51

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) ​none of the choices.

Question 52

Dharma enters into a contract to manage the operations of Esther's dental office for one year, renewable for subsequent one-year terms. If this contract is discharged like most contracts, it will be​

A) ​canceled.
B) ​breached.
C) ​altered.
D) ​performed.

Question 53

Lew's Landscaping Service substantially performs its contract with Metro Office Park. Metro's duty to perform​

A) ​remains absolute.
B) ​is discharged.
C) ​is excused.
D) ​is suspended.

Question 54

Fact Pattern 11-1
Medical Accounts Collection enters into a contract to employ Natalie as a billing and credit manager for two years. During the first year, Natalie is often absent without explanation and when present fails to adequately do her job.
Refer to Fact Pattern 11-1. Natalie's performance most likely​

A) ​discharges Medical Accounts from the contract.
B) ​has no effect on Medical Accounts' performance.
C) ​undercuts Medical Accounts' duties under the contract.
D) ​suspends Medical Accounts' duty to perform.

Question 55

Restoration, Inc., enters into a contract to refurbish a train depot for Dining, Inc., to open as Whistle Stop. If Restoration completes most of the work promised in the contract, its performance will be​

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

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

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.

Question 58

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 59

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 60

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 61

Home Built LLC enters into a contract with Irene to build a house. Before Home starts to work, the market price for its services increases-in effect, Home will lose money by if it fulfills its contract with Irene. Home notifies her that it will not perform. Home's obligation to perform is​

A) ​breached.
B) ​discharged.
C) ​rescinded.
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

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 64

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 65

Floors n' More, Inc., hires Gordon to renovate Floors n' Mores showroom. Gordon submits plans that Floors n' More approves. Gordon completes the major reconstruction, paints the interior, and buys the fixtures and furnishings. Floors n' More rejects some of these items because they do not match the plans, and subsequently refuses to allow Gordon to finish the work or to collect payment. Could Gordon sue successfully for payment for the entire contract?​

Question 66

Quality Scrap Company contracts to provide ten tons of steel at $500 per ton to Rendered Materials, Inc. An unforeseen shortage occurs suddenly, making it impossible for Quality to fulfill the contract for less than $5,000 per ton. The firm's best defense against performing the contract is that​

A) ​performance of the contract is commercially impracticable.
B) ​procuring the steel would force the company into bankruptcy.
C) ​the law has rendered performance of the contract illegal.
D) ​the specific subject matter of the contract has been destroyed.

Question 67

Carol and Bob enter into a contract for Bob to perform waste management services for Carol's commercial properties. Later, Bob alters a material term-increases the price-without Carol's knowledge or consent. She​

A) ​can alter a material term, such as the payment date, without Bob's consent.
B) ​can treat the contract as discharged.
C) ​must adapt her performance accordingly.
D) ​must determine whether Bob's alteration constitutes substantial performance.

Question 68

Construction LLC agrees to build a store for Discount Retail, Inc., at a specific location. Before the work begins, the local zoning law is changed to prohibit commercial buildings at that location. In this situation​

A) ​Construction is in breach of contract.
B) ​the local zoning authority is in breach of contract.
C) ​the contract is discharged.
D) ​Discount must compensate Construction for its lost profit.

Question 69

Contractors Service, Inc., enters into a contract to build a restaurant for Dierdre with her 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.

Question 70

Jason and Kelly enter into a contract for Jason to renovate Kelly's house by a certain date. Jason never performs. After the applicable limitations period has passed, Kelly decides to bring a suit against Jason for breach. This suit​

A) ​must be filed within ten to twenty years, depending on state law.
B) ​can no longer be brought.
C) ​can be filed within four years after Kelly decides to sue.
D) ​must be filed between four and five years after Kelly decides to sue.

Question 71

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 72

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.