Question 1

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.

Accepted Answer

This question pertains to the concept of priority of assignment of claims. Under the English rule, the first assignee to give notice of assignment to the debtor has priority over subsequent assignees. Therefore, in this case, as Allen gave notice of the assignment immediately after being assigned the claim, he has priority over Jack. However, in states that follow the American rule, the first assignee does not necessarily have priority over subsequent assignees, regardless of whether notice of assignment was provided to the debtor or not. Therefore, option A is incorrect. Option C is incorrect as it implies that Allen has no rights, which is not true because Allen still has rights as an assignee but his priority depends on the jurisdiction. Option D is incorrect as it is too generalizing – while there may be some states where Allen has priority, it cannot be applied to all states.

Question 2

D'Alemberte contracts with Elias to render personal nursing services for the benefit of Federica. This is
A) ​a delegation.
B) ​an assignment.
C) ​a third party beneficiary contract.
D) ​an alienation.

Accepted Answer

This is a third party beneficiary contract because D'Alemberte contracts with Elias to provide services for the benefit of Federica, making Federica the intended third party beneficiary.

Question 3

Merry Music Inc. and Nina enter into a contract for Nina to write six songs for which Merry Music agrees to pay her. Nina transfers her right to payment under the contract to Omni Artists Agency. In the transfer of rights, Nina is
A) ​a delegator.
B) ​an assignor.
C) ​an obligor.
D) ​a third party beneficiary.

Accepted Answer

Nina is transferring her right to payment under the contract to Omni Artists Agency, which makes her an assignor.

Question 4

Revenue & Sales Corporation and Software, Inc., enter into a contract for the design of custom software for which Revenue & Sales agrees to pay $64,500. Software transfers the right to payment under the contract to CreditLine LLC. CreditLine is
A) ​an assignor.
B) ​an assignee.
C) ​a third-party beneficiary.
D) ​a delegatee.

Accepted Answer

CreditLine LLC is the recipient of the right to payment under the contract, which is an example of an assignment. Therefore, CreditLine LLC is an assignee.

Question 5

​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.

Accepted Answer

The answer of ​Gavin takes out an insurance policy on...

Question 6

Bill and Charlene enter into a contract for the clearing, plowing, and preparing of Charlene's 100-acre tract for which she agrees to pay $1,000. Bill transfers his duty under this contract to Dewey. Dewey is
A) ​a delegatee.
B) ​an assignee.
C) ​an obligee.
D) ​a delegator.

Accepted Answer

Dewey is a delegatee because he is the party to whom Bill has transferred his duty to perform under the contract.

Question 7

Ilene and Jerry enter into a contract under which Ilene agrees to provide grounds keeping services for Jerry's Family Fun Center. Under an anti-delegation clause, the contract can prohibit and prevent the transfer of
A) ​only duties that are personal in nature.
B) ​only duties that are impersonal in nature.
C) ​no duties under the contract.
D) ​all duties under the contract.

Accepted Answer

An anti-delegation clause in a contract can prohibit the transfer of all duties under the contract, regardless of whether they are personal or impersonal in nature.

Question 8

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.

Accepted Answer

The clause stating that any assignment is "void" prohibits any assignment, meaning that the contract cannot be assigned to another party.

Question 9

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.

Accepted Answer

By unconditionally assigning his rights in the deal with Kasey to Jenny, Illya has effectively transferred his right to receive the $1,000 from Kasey to Jenny. Therefore, Illya no longer has any right to the $1,000, and his right has been extinguished.

Question 10

​Pico, a famous chef, agrees to give ten culinary lessons to Rhoda in exchange for $1,200. Pico's attempt to transfer his contract duties to Sven, an unknown sous-chef, will probably be
A) ​permitted because contracts may be freely delegated.
B) ​permitted because the contract is concerned with cookery.
C) ​prohibited because contracts may not be freely delegated.
D) ​prohibited if Pico and Sven have different skill levels.

Accepted Answer

The delegation of duties in a contract is generally prohibited if the performance depends on the personal skills or expertise of the original party, and the substitute does not possess the same level of skill or reputation.

Question 11

​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.

Accepted Answer

Kris remains liable under the contract if Leza does not perform, as an assignment does not relieve Kris of their obligations. Joy can hold Kris responsible if Leza fails to fulfill the contract.

Question 12

Leon contracts to install automatic watering troughs in Kendall's dairy barn. Leon then becomes seriously ill and contracts with Jake to install the troughs. Jake is unreliable and never shows up to install the troughs. Kendall can sue
A) ​no one.
B) ​Jake only.
C) ​Leon only.
D) ​Jake or Leon.

Accepted Answer

Jake is liable for breach of contract. Leon is liable for breach of contract and for failing to perform his duty to Kendall to install the troughs.

Question 13

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.

Accepted Answer

In the context of assignment of rights, notice of the assignment to the debtor (in this case, Ian) is not legally required for the assignment to be effective. The assignment between Jo and Kyle is valid upon agreement, regardless of whether Ian is notified. However, notifying Ian would be practical to ensure that he makes payments to the correct party (Kyle) going forward.

Question 14

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.

Accepted Answer

The doctrine of material alteration states that an assignment is voidable if the assignment materially alters the duty of the obligor, materially changes the risk or burden imposed on him by the contract, or materially impairs his chance of obtaining return performance. Retail can argue that the assignment to Tough Road materially increases the risk of nonperformance because of its poor record.

Question 15

​Phillip assigns his rights under a contract with Maria to his college roommate, Owen. Neither Phillip nor Owen notifies Maria of the assignment. The assignment
A) ​will not be effective until notice is given to Maria.
B) ​will become effective after thirty days even if no notice is given to Maria.
C) ​is immediately effective.
D) ​can be circumvented.

Accepted Answer

An assignment is immediately effective and does not require notice to be given to the other party (in this case, Maria) in order to be valid, unless the contract explicitly requires such notice. Therefore, option C is the correct choice. Option A is incorrect because notice is not required for the assignment to become effective. Option B is also incorrect because the effectiveness of the assignment is not dependent on a period of time passing. Option D is irrelevant and does not address the effectiveness of the assignment.

Question 16

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) ​a right whose transfer is otherwise expressly prohibited by statute.

Accepted Answer

A contract right to receive payment can typically be transferred unless otherwise prohibited by the contract or law. The other options do not fall under this exception.

Question 17

Uri and Victor enter into a contract by which Uri promises to deliver business cards, advertising banners, and other marketing materials to Victor. Uri later transfers his duty under the contract to Wren. Uri is
A) ​a delegator.
B) ​a delegatee.
C) ​an assignor.
D) ​an assignee.

Accepted Answer

Uri is a delegator because he is transferring his duty to perform under the contract to another party, Wren.

Question 18

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, he asks Otis to do the cutting and trimming. This transfer of duties is
A) ​a delegation.
B) ​an assignment.
C) ​a third party beneficiary contract.
D) ​alienation.

Accepted Answer

A delegation is the transfer of duties from one party (the delegator) to another party (the delegatee) while remaining responsible for the performance of the contract. In this case, Nick is delegating his duties to Otis, but he remains responsible to Market Company for the performance of the landscaping contract. Therefore, the correct answer is A) a delegation.

Question 19

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.

Accepted Answer

The answer of Laramie contracts to provide cattle-herding services to...

Question 20

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

Accepted Answer

Prohibiting the transfer of property rights is against public policy as it restricts the free flow of property ownership and limits the rights of individuals to enter into contracts and dispose of their property as they see fit.

Quiz 17: Third Party Rights

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

D'Alemberte contracts with Elias to render personal nursing services for the benefit of Federica. This is

Merry Music Inc. and Nina enter into a contract for Nina to write six songs for which Merry Music agrees to pay her. Nina transfers her right to payment under the contract to Omni Artists Agency. In the transfer of rights, Nina is

Revenue & Sales Corporation and Software, Inc., enter into a contract for the design of custom software for which Revenue & Sales agrees to pay $64,500. Software transfers the right to payment under the contract to CreditLine LLC. CreditLine is

​Gavin takes out an insurance policy on her car. Gavin can assign his policy to a third party

Bill and Charlene enter into a contract for the clearing, plowing, and preparing of Charlene's 100-acre tract for which she agrees to pay $1,000. Bill transfers his duty under this contract to Dewey. Dewey is

Ilene and Jerry enter into a contract under which Ilene agrees to provide grounds keeping services for Jerry's Family Fun Center. Under an anti-delegation clause, the contract can prohibit and prevent the transfer of

A contract between Laser Equipment, Inc., and Medical Center contains a clause stating that any assignment is "void." This ordinarily prohibits

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

​Pico, a famous chef, agrees to give ten culinary lessons to Rhoda in exchange for $1,200. Pico's attempt to transfer his contract duties to Sven, an unknown sous-chef, will probably be

​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

Leon contracts to install automatic watering troughs in Kendall's dairy barn. Leon then becomes seriously ill and contracts with Jake to install the troughs. Jake is unreliable and never shows up to install the troughs. Kendall can sue

Ian owes Jo $5,000. Jo assigns the right to this payment to Kyle. Notice by Jo to Ian of the assignment

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

​Phillip assigns his rights under a contract with Maria to his college roommate, Owen. Neither Phillip nor Owen notifies Maria of the assignment. The assignment

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

Uri and Victor enter into a contract by which Uri promises to deliver business cards, advertising banners, and other marketing materials to Victor. Uri later transfers his duty under the contract to Wren. Uri is

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, he asks Otis to do the cutting and trimming. This transfer of duties is

Laramie contracts to provide cattle-herding services to Miles for $1,400 per month. Laramie cannot transfer this duty

Marco and Fred enter into a contract for the sale of Marco's apartment for which Fred agrees to pay him $100,000. Marco cannot prohibit Fred from transferring his right to the ownership of the apartment because such a prohibition is

Gavin takes out an insurance policy on her car. Gavin can assign his policy to a third party

Pico, a famous chef, agrees to give ten culinary lessons to Rhoda in exchange for $1,200. Pico's attempt to transfer his contract duties to Sven, an unknown sous-chef, will probably be

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

Phillip assigns his rights under a contract with Maria to his college roommate, Owen. Neither Phillip nor Owen notifies Maria of the assignment. The assignment