Question 1

Mr.Jacob,who is terminally ill,writes a will transferring all his assets to his daughter Silvia,in the event of his death.The doctors say that Mr.Jacob will live for about six months.The day after the will is written,Silvia wishes to transfer her expected inheritance to her son,Jacob Jr.This assignment will be ________.

Accepted Answer

The assignment of the expected inheritance to Silvia's son Jacob Jr. is invalid as the will has not yet come into effect and the assets have not yet been transferred to Silvia.

Question 2

Which of the following is true of an assignment of a right?

Accepted Answer

In an unconditional assignment, the assignor loses the right to sue the obligor directly for nonperformance, as the assignee assumes the right to sue for any breach of the contract. However, the assignor retains all other rights, such as the right to receive payment from the assignee. The obligor is still entitled to performance, but now from the assignee instead of the assignor. Personal defenses, such as claims of fraud or duress, can be raised by the obligor against the assignee.

Question 3

A(n)________ is used if the obligor does not want to deal with or render performance to an unknown third party.

Accepted Answer

A

Question 4

A party who owes a duty of performance under a contract is called the ________.

Accepted Answer

The party who owes a duty of performance under a contract is called the obligor. The obligor has an obligation to fulfill the terms and conditions of the contract.

Question 5

When an assignor makes an assignment of a right under a contract,the assignee is under a duty to ________.

Accepted Answer

When an assignor makes an assignment of a right under a contract, the assignee becomes the new party in interest and the obligor must render performance to the assignee instead of the assignor. Therefore, the assignee has a duty to notify the obligor of the assignment and that performance must be rendered to them instead of the assignor. Options B, C, and D are incorrect as they do not reflect the assignee's duty in the assignment.

Question 6

An actor signs a contract with a movie studio where she agrees to star in a comedy.Which of the following is true of assignment of such a contract?

Accepted Answer

Both the actor and the studio can agree that their contract can be assigned. Assigning contracts is generally allowed as long as both parties agree to it, and in this case, the actor and the studio can mutually decide to assign the contract to another studio or assign the actor to a different movie within the same studio. Option A is incorrect, as the movie studio cannot unilaterally assign the contract without the actor's consent. Option B is incorrect, as the contract is specific to the comedy movie mentioned and does not automatically include the actor in other movies. Option C is also incorrect, as contract assignment refers to transferring the agreement to another party, and is not relevant to an actor's ability to assign their contract in case of injury.

Question 7

Which of the following is true in the event that an assignee does not provide a notice of assignment to the obligor?

Accepted Answer

If the assignee does not provide notice of assignment to the obligor, the assignee can still sue the obligor to recover payment. However, the assignee may not be able to recover damages from the obligor if the obligor made payment to the assignor in good faith, without knowledge of the assignment. The assignee can also still sue the assignor for damages if the assignor breached the assignment agreement by failing to provide notice to the obligor.

Question 8

Karen borrows $10,000 from Celeste.Karen is to pay Celeste the principal amount,with 8 percent interest,over five years in 60 equal monthly payments.After one year of receiving proper payments from Karen,Celeste assigns this right to receive future payments to Larry.Who has the duty to notify Celeste about the assignment?

Accepted Answer

Since Celeste assigned the right to receive payments to Larry, it becomes his responsibility to notify Celeste about the assignment. This is because he is now the new party receiving the payments, and it is important for Celeste to know that she should expect payment from Larry instead of Karen.

Question 9

If an obligor continues to make payments to an assignor in spite of receiving notice from an assignee,________.

Accepted Answer

When an assignee notifies an obligor of the assignment and the obligor continues to make payments to the assignor, the assignee can sue the obligor for recovery because the obligor's payments to the assignor do not discharge the obligor's obligation to the assignee.

Question 10

Howard is injured by Penny in a car accident,caused due to Penny's negligence.Which of the following statements holds true for Howard's right to assign?

Accepted Answer

Howard's right to sue Penny cannot be assigned. Personal injury claims involve the injured party's right to recover damages for their own injuries, and therefore cannot be assigned to another party. Howard can only settle the claim himself or transfer the right to settle the claim, but he cannot transfer his right to bring a lawsuit against Penny. Punitive damages, medical expenses, and the appellate court right are all part of this personal injury claim and cannot be assigned separately.

Question 11

A legal right that arises out of a breach of contract is ________.

Accepted Answer

Legal rights arising out of a breach of contract are generally assignable unless the assignment would significantly change the duty of the obligor, increase the obligor's risk, or impair the obligor's chance of obtaining return performance.

Question 12

The transfer of contractual rights by an obligee to another party is known as a(n)________.

Accepted Answer

The transfer of contractual rights by an obligee to another party is known as an assignment. Choice B) accommodation refers to a situation where a party to a contract agrees to accept a different performance than that which was originally promised. Choice C) delegation refers to the transfer of duties by a party to a contract to another party. Choice D) substitution is not a term commonly used in contract law.

Question 13

Kimlon Informatics has to recover $5,000 from a client for its services.The recovery period is 100 days but Kimlon needs the money immediately.It sells the right of collecting money from its client to Quikcollect,a collection agency.Here,Kimlon Informatics is the ________.

Accepted Answer

Kimlon Informatics is the obligee because it is the party to whom the original debt is owed. In this scenario, by selling the right to collect the debt to Quikcollect, Kimlon is transferring its position as the creditor (obligee) to Quikcollect.

Question 14

Which of the following should provide a notice of assignment to the obligor?

Accepted Answer

The assignee should provide a notice of assignment to the obligor to inform them that their obligation has been assigned to a new party.

Question 15

An obligee who transfers the right to receive performance is called the ________.

Accepted Answer

An obligee who transfers the right to receive performance to another party is called the assignor. This term is used in contract law to describe a party that has transferred its rights under the contract to another party, known as the assignee.

Question 16

Which of the following rights is generally assignable in the United States?

Accepted Answer

The recovery of debt is generally assignable in the United States, meaning that the right to collect on a debt can be transferred to another party. Personal service contracts, future rights, and legal actions are generally not assignable due to the unique and personal nature of the obligations involved.

Question 17

An ________ refers to a third party who acquires rights under other people's contracts.

Accepted Answer

An assignee is a third party who acquires rights under other people's contracts.

Question 18

Ellen,who has a safe driving record,purchases automobile insurance from an insurance company.Which of the following is the accurate reason why Ellen would be disallowed from assigning her rights to be insured to another driver?

Accepted Answer

Allowing Ellen to assign her rights to another driver would change the risk and duties of the insurance company because the new driver may have a different driving record and may pose a higher risk of accidents. Therefore, insurance companies generally disallow assignment of rights to be insured in personal auto insurance policies.

Question 19

Among the parties to a contract,the ________ is the debtor.

Accepted Answer

The obligor is the party who has an obligation or duty to perform under a contract. They are also known as the debtor because they owe a performance or payment obligation to the other party, who is the obligee or creditor. Therefore, choice B is the correct answer. The other options, assignor and assignee, refer to parties involved in the assignment of rights or obligations from one party to another, but they are not the primary parties to the original contract.

Question 20

Jay Bosley borrows $15,000 from the County Bank with an interest rate of 9 percent.Jay defaults on the loan,and County Bank assigns the rights to an agency to recover the money.Jay can raise a defense against County Bank if ________.

Accepted Answer

Jay can raise a defense against County Bank if the agency demands a higher interest rate than what was originally agreed upon in the loan contract with the bank.

Quiz 13: Third-Party Rights and Discharge