Question 1

Linda assigns to Ben a right to receive rent payments.The law implies the following warranty on Linda's part:
A)the tenant is solvent.
B)Linda actually has a right to the rental payments.
C)the tenant will actually pay.
D)No warranties are implied by law in an assignment.

Accepted Answer

The law implies a warranty that Linda actually has a right to the rental payments she assigns to Ben. This means that Linda has the legal authority to assign the right to receive rent payments and that she is not assigning something she does not actually own or control. The other choices are not necessarily implied warranties in an assignment of rent payments. While a tenant's solvency may be important, it is not necessarily warranted by Linda in assigning the right to receive rent payments. Similarly, the guarantee that the tenant will actually pay is not necessarily implied by Linda's assignment. Finally, while some assignments may come with warranties, such as a warranty of title in a sale of goods, there is no general warranty implied by law in an assignment.

Question 2

Ted and Alice own their recreational vehicle subject to a security agreement to Third U.S.Bank to secure the repayment of the purchase money loan.Ted and Alice sell their RV to Bob and Carol,who agree to take over the loan payments to the bank.There is no novation with the bank.Under these facts,if Bob and Carol do not make the loan payments,Third U.S.Bank:
A)can sue Bob and Carol only.
B)can sue Ted and Alice only.
C)can sue Bob,Carol,Ted,and Alice.
D)cannot sue anyone but can repossess the RV.

Accepted Answer

The answer of Ted and Alice own their recreational vehicle...

Question 3

Johann,a well-known musician,agrees to give ten guitar lessons to Elton for $2,000.Nothing in the contract itself prohibits a delegation.If Johann delegates his obligation to Eugene,a second-year musical student and enthusiastic guitar player,then the delegation will probably be:
A)permitted because contracts may be freely delegated.
B)permitted because the contract is just for music lessons.
C)prohibited because the contract is for service from a specific person.
D)prohibited by the UCC because this is a sale of services.

Accepted Answer

The contract is for services from a specific person, Johann. As such, it is generally not allowed to delegate this obligation to someone else without the consent of the other party, in this case Elton. While some contracts may allow for delegation, such as those for the assignment of a debt, this contract for guitar lessons is not one of them.

Question 4

Jerry purchased a laptop computer for his personal use from Computer City on an installment loan contract.The sales contract stated that in the event the contract is assigned to a third party,the purchaser (Jerry)promises he will not assert any claim or defense against the assignee which he might have against Computer City.Computer City immediately assigns the contract rights to Finance USA.The computer stops working within two weeks of the purchase.
A)This is a valid waiver of defense clause.Jerry signed the contract,so he can't raise a defense to Finance USA.
B)Finance USA is an intended third party beneficiary and may therefore enforce the contract.
C)In general,this type of waiver is not permitted in consumer contracts,so Jerry can raise his claim against Finance USA.
D)This is a delegation of Jerry's duties and the delegator remains liable on the contract unless a novation agreement is made.

Accepted Answer

Waiver of defense clauses are generally not permitted in consumer contracts, and Jerry may still raise his claim against Finance USA, regardless of the clause in the sales contract. This is to protect consumers from being forced to give up their legal rights and defenses.

Question 5

A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.Under this arrangement the rock group is the:
A)assignor.
B)assignee.
C)delegator.
D)delegatee.

Accepted Answer

The rock group is assigning its payment to the Costume Shop, making them the assignor. The assignee is the Costume Shop, who will receive the payment. Delegator and delegatee are not applicable in this situation, as there is no delegation of duties or responsibilities.

Question 6

An assignment:
A)is generally revocable if it is gratuitous and is either oral or written.
B)for consideration is irrevocable.
C)becomes valid when the obligor receives notice of the assignment.
D)must follow formalities.

Accepted Answer

An assignment for consideration is irrevocable because consideration is an exchange of value between the parties that makes the assignment a contract. Gratuitous assignments, on the other hand, may be revocable, especially if they are not in writing. Notice of the assignment is generally not required for it to be valid, and formalities are only necessary for certain types of assignments, such as assignments of negotiable instruments.

Question 7

A donee beneficiary:
A)is not entitled to enforce a contract against either party.
B)usually does not give consideration in return for the gift.
C)will generally become a creditor beneficiary after his or her rights vest.
D)is an incidental beneficiary.

Accepted Answer

A donee beneficiary is someone who is intended to receive a gift or benefit under a contract, but does not provide consideration in return. They can enforce the contract against the promisor (one who makes the promise to give the gift), but not against the promisee (one who receives the promise of the gift). Therefore, A is incorrect. A donee beneficiary does not become a creditor beneficiary, so C is also incorrect. An incidental beneficiary is someone who is unintentionally benefited by the contract, so D is also incorrect.

Question 8

A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.This is:
A)a valid assignment because of the rule of freedom to contract.
B)a valid assignment because this is a simple transfer of the right to receive money.
C)an invalid assignment because it increases the burden of the payor.
D)an invalid assignment because this is a personal service contract.

Accepted Answer

The answer of A rock group assigns its payment under...

Question 9

Which of the following duties can probably be delegated?
A)An agreement to perform an operation.
B)A contract to paint a picture.
C)An agreement by an attorney to draft a contract.
D)An agreement to paint a house.

Accepted Answer

Delegating the duty to paint a house is a task that can be assigned to someone else, such as a contractor or a painter. The other options involve specific skills or legal responsibilities that cannot be delegated without careful consideration.

Question 10

Which statement most accurately describes third party beneficiary rights?
A)A beneficiary may enforce a contract if the parties intended to benefit him and if enforcing the promise will satisfy a duty of the promisee to the beneficiary.
B)If a promisee intended to make a gift to the beneficiary,the beneficiary may not enforce the contract.
C)An intended third party beneficiary has no enforceable rights in a contract.
D)Incidental beneficiaries have enforceable rights against both contracting parties.

Accepted Answer

A third party beneficiary may enforce a contract if the parties intended to benefit him and if enforcing the promise will satisfy a duty of the promisee to the beneficiary. The key here is that the parties must have intended to benefit the third party in some way, and that enforcing the promise will satisfy a duty owed to the beneficiary. This means that the beneficiary cannot simply be an incidental beneficiary who happens to benefit from the contract, but rather must be an intended beneficiary.

Question 11

Tyron purchased a vacant lot and entered into a contract with BZ Inc.to construct a shopping center on the site.Douglas heard about this contract and built a restaurant on an adjoining piece of property because of the planned shopping center.Tyron was unable to raise the necessary capital and was unable to perform the contract with BZ,Inc.Douglas sued Tyron for breach of contract as a third party beneficiary.Douglas will probably:
A)win as a third party creditor beneficiary.
B)win as a third party donee beneficiary.
C)lose as a third party incidental beneficiary.
D)lose as a third party creditor beneficiary.

Accepted Answer

Douglas is considered an incidental beneficiary because the contract between Tyron and BZ Inc. did not specifically name Douglas as a beneficiary. As an incidental beneficiary, Douglas cannot enforce the contract and therefore would not be able to win a lawsuit for breach of contract against Tyron.

Question 12

An assignment is valid and enforceable against all parties:
A)from the moment it is made.
B)from the moment the assignor notifies the obligor.
C)from the moment the assignee notifies the obligor.
D)from the moment the obligor is notified from any source.

Accepted Answer

An assignment becomes valid and enforceable against the obligor once the obligor is notified of the assignment from any source, as this is when the obligor becomes aware of the change in who is entitled to the performance.

Question 13

The status of a third party is determined by:
A)the type of contract.
B)whether the third party gave consideration.
C)the reasonable expectations of the third party.
D)the intent of the contracting parties.

Accepted Answer

The status of a third party in a contract is primarily determined by the intent of the contracting parties to benefit that third party. This intent is what gives the third party the potential rights or benefits under the contract.

Question 14

Generally,in comparison to a donee beneficiary,a creditor beneficiary has:
A)about the same legal rights.
B)substantially greater rights.
C)substantially fewer legal rights.
D)virtually no legal rights.

Accepted Answer

The answer of Generally,in comparison to a donee beneficiary,a creditor...

Question 15

A nonparty to a contract may enforce the contract if the person is:
A)a donee beneficiary.
B)an incidental beneficiary.
C)a creditor beneficiary.
D)Both a andc

Accepted Answer

A nonparty may enforce a contract if they are either a donee beneficiary or a creditor beneficiary. An incidental beneficiary, on the other hand, has no enforceable rights under the contract. Therefore, choices A and C are correct and the answer is D.

Question 16

Cheryl enters into a contract with Gabe.In this contract,Cheryl asks Gabe to pay the money he owes her from the contract to her friend Leah because Leah is having financial troubles.Leah is:
A)a third party creditor beneficiary.
B)a third party donee beneficiary.
C)a third party incidental beneficiary.
D)the promisee in the contract.

Accepted Answer

Leah is a third party donee beneficiary because she is not a party to the contract but Cheryl intends for Gabe to make the payment to Leah as a gift or benefit to her.

Question 17

Molly and Craig are the original parties to a contract.Craig is obligated to design a Website for Molly.They subsequently make an agreement with Eric that Eric should take the place of Craig and assume all of Craig's rights and duties under the contract.The agreement releases Craig from his obligations under the contract.This agreement is:
A)a novation.
B)an accord and satisfaction.
C)an assignment.
D)a nullification.

Accepted Answer

The agreement between Molly, Craig, and Eric where Eric takes over Craig's rights and duties under the contract and releases Craig from his obligations is a novation. Novation is a process where one of the original parties to a contract is replaced by a new party, and the new party takes over all the rights and obligations of the original party.

Question 18

Wright Company contracted with the city of St.Louis to train and employ disadvantaged youths.If Wright fails to fulfill the contract and is sued by one of the disadvantaged youths,the youth would:
A)win,as he is an intended beneficiary.
B)win,as he is a donor beneficiary.
C)lose,as he is a creditor beneficiary.
D)lose,as he is an incidental beneficiary.

Accepted Answer

The answer of Wright Company contracted with the city of...

Question 19

Garth's Imports sold a car to Wally on credit for $30,000.Garth assigned to Cassandra all of his rights to receive money from Wally.Cassandra did not inform Wally of the assignment.Therefore,Wally continued to make the next three payments directly to Garth.Shortly thereafter,Garth left the country with the money.If Cassandra sues Wally for the missing three payments:
A)Cassandra will not be able to collect the money from Wally.
B)Wally is not liable for the three payments because an assignment is not valid unless the obligor is notified.
C)Wally is liable for the three payments because Cassandra paid consideration for the assignment rights.
D)Wally cannot raise the defense of previous payment.

Accepted Answer

Wally was not informed of the assignment and therefore continued to make payments directly to Garth. Wally fulfilled his obligation by making these payments to Garth, and Cassandra cannot collect the same payments from him again. The failure to provide notice to the obligor (Wally) makes the assignment invalid as per the rules of the assignment of rights.

Question 20

Susan took out a life insurance policy on herself,paying all of the premium payments.She named her daughter,Jessica,as the beneficiary under the policy.Jessica has not given anything in consideration for the policy.Jessica is:
A)a donee beneficiary who has rights to enforce the policy once Susan dies.
B)a creditor beneficiary who has rights to enforce the policy once Susan dies.
C)an incidental beneficiary because Jessica did not give any consideration for the policy and therefore cannot enforce the policy even when Susan dies.
D)None of the above.

Accepted Answer

Jessica is a donee beneficiary because she is the intended recipient of the benefits under the policy without giving any consideration. As the named beneficiary, she has the right to enforce the policy once Susan dies.

Quiz 15: Third parties

Linda assigns to Ben a right to receive rent payments.The law implies the following warranty on Linda's part:

Johann,a well-known musician,agrees to give ten guitar lessons to Elton for $2,000.Nothing in the contract itself prohibits a delegation.If Johann delegates his obligation to Eugene,a second-year musical student and enthusiastic guitar player,then the delegation will probably be:

A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.Under this arrangement the rock group is the:

An assignment:

A donee beneficiary:

A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.This is:

Which of the following duties can probably be delegated?

Which statement most accurately describes third party beneficiary rights?

An assignment is valid and enforceable against all parties:

The status of a third party is determined by:

Generally,in comparison to a donee beneficiary,a creditor beneficiary has:

A nonparty to a contract may enforce the contract if the person is:

Cheryl enters into a contract with Gabe.In this contract,Cheryl asks Gabe to pay the money he owes her from the contract to her friend Leah because Leah is having financial troubles.Leah is:

Wright Company contracted with the city of St.Louis to train and employ disadvantaged youths.If Wright fails to fulfill the contract and is sued by one of the disadvantaged youths,the youth would:

Susan took out a life insurance policy on herself,paying all of the premium payments.She named her daughter,Jessica,as the beneficiary under the policy.Jessica has not given anything in consideration for the policy.Jessica is: