Question 1

Hiram,when he assigns to Tim his right to receive the next four rent payments on an apartment he owns,warrants that the tenant will make the assigned payments to Tim.

Accepted Answer

Assigning the right to receive rent payments does not inherently include a warranty that the tenant will actually make those payments, unless specifically stated in the assignment agreement.

Question 2

Theresa has a contract to teach eighth grade at Washington Middle School.She decided she could make more money writing a book,so she wants to assign her teaching contract to her friend,Stephanie,who is also a licensed teacher.

Accepted Answer

Theresa's action involves both assigning her contract and delegating her teaching duties, which are personal in nature. If the school district agrees to accept Stephanie, a novation would occur, relieving Theresa of her obligations.

Question 3

Unless otherwise provided by statute,an assignment may be made orally.

Accepted Answer

Unless a particular statute requires a written assignment, an assignment can be made orally in most cases. However, it is always advisable to have a written assignment to avoid any misunderstandings or disputes.

Question 4

A(n)__________ is a method of discharging a contract in which a third party becomes bound upon a promise to the obligee.

Accepted Answer

Novation is a method of discharging a contract where a third party takes over the obligations and rights of one or both parties. The new party essentially replaces one of the original parties in the agreement. This results in release and discharge of the original party from the contract, and the new party takes on all responsibilities and benefits of the contract.

Question 5

Stark enters into a contract with a contractor to build a large shopping mall in River City.Donner will greatly benefit from this contract since his convenience store is adjacent to the mall.Donner in this instance is:

Accepted Answer

Donner is an incidental beneficiary because he will only receive an unintended or indirect benefit from the contract between Stark and the contractor. The contract was not formed to directly benefit Donner, but rather the building of the shopping mall will simply increase foot traffic near his convenience store.

Question 6

Annette entered into a contract with a local truck dealer to have a new truck delivered to her daughter,Sue,as a graduation present.In this contract,Sue is:

Accepted Answer

Sue is a donee beneficiary because she is receiving the truck as a gift from Annette.

Question 7

A(n)__________ is an intended beneficiary of a contract who receives the benefits of the contract as a gift.

Accepted Answer

A donee beneficiary is an intended beneficiary of a contract who receives the benefits of the contract as a gift. An incidental beneficiary is not intended to benefit from the contract, an assignor is a party who transfers their rights or interests in a contract to another party, and an intended beneficiary is someone who is specifically named in the contract as a party who will receive a benefit.

Question 8

Courts will enforce contracts for the benefit of all but which of the following?

Accepted Answer

Courts typically enforce contracts for the benefit of donee beneficiaries, creditor beneficiaries, and intended beneficiaries because these parties are recognized as having enforceable rights under the contract. Incidental beneficiaries, however, do not have enforceable rights because the benefits they receive from the contract are unintended and incidental, not a result of specific intent by the parties to the contract to benefit them.

Question 9

Professor Doright has a life insurance policy on his own life that provides that in the event of his death,his mother will receive the proceeds.Professor Doright's mother is a(n):

Accepted Answer

Professor Doright's mother is specifically named as the beneficiary and is not receiving the proceeds as a result of a debt owed by Professor Doright, so she is a donee beneficiary.

Question 10

Marlene owes Bailey $750 due June 1.Bailey assigns the debt to Greg on May 1,but neither Bailey nor Greg informs Marlene.On June 1,Marlene pays Bailey.Marlene is fully discharged from her obligation.

Accepted Answer

Since Marlene was not informed of the assignment to Greg, her payment to Bailey discharges her obligation as she acted in good faith without knowledge of the assignment.

Question 11

Sean has a right against Tanner and assigns it for value to Megan.Later,Sean gives Tanner a release.Megan:

Accepted Answer

The answer of Sean has a right against Tanner and...

Question 12

A(n)__________ is a third party who obtains possible benefits but no rights under a contract.

Accepted Answer

An incidental beneficiary is a third party who may receive some benefit from a contract, but has no legal rights under the contract. The contract was not intended to benefit the incidental beneficiary, but rather the benefit is simply an unintended consequence.

Question 13

When contract terms prohibiting the assignment of rights exist,most courts will:

Accepted Answer

Most courts will strictly construe such terms, interpret them as a promise not to assign, and may award damages for breach, covering all options.

Question 14

Will wants to buy a new car.He goes to the bank to get a loan for the purchase,and signs an agreement to pay $10 per month in premiums on a term life insurance policy which names the bank as the recipient of the policy proceeds in the event of his death before the loan is repaid.The bank is a(n):

Accepted Answer

The bank is a creditor beneficiary because it will receive the policy proceeds if Will dies before repaying the loan. The bank is not an incidental beneficiary because the insurance policy was specifically purchased to secure the loan, and not as a side benefit. The bank is also not a donee beneficiary because it is not receiving the policy proceeds as a gift, but rather as a way to ensure repayment of the loan. The bank is not an assignee because there is no indication that Will assigned his rights in the insurance policy to the bank.

Question 15

Which of the following duties would not be delegable?

Accepted Answer

Duties that require personal skills or judgments, such as teaching a class, are typically not delegable because they are based on the unique abilities or qualifications of the individual contracted to perform them.

Question 16

A transfer to a third party of a contractual obligation is known as a(n):

Accepted Answer

A delegation of duties is the transfer of a contractual obligation from one party to a third party. An assignment of rights is the transfer of a contractual benefit to a third party. Revocability of assignment refers to the ability of the assignor to revoke or cancel the assignment. Partial assignment is the transfer of only a portion of the contractual rights or duties to a third party.

Question 17

A partial assignment is a transfer of a portion of the contractual rights to one or more assignees.

Accepted Answer

A partial assignment allows for a transfer of only a portion of the contractual rights to one or more assignees, whereas a complete assignment would transfer all contractual rights to one assignee.

Question 18

Anita owes Brad $75,000.Brad signs a written statement granting Carl a gratuitous assignment of his rights from Anita.If Brad delivers the signed statement to Carl before he dies:

Accepted Answer

Delivery of the written statement to Carl before Brad's death makes the assignment irrevocable. Brad has granted Carl a gratuitous assignment of his rights from Anita and the delivery of the signed statement to Carl completes the assignment. Brad's death does not affect the validity of the assignment.

Question 19

If Randall and Gale agree to an assignment of Randall's contract with Doug:

Accepted Answer

According to both the Uniform Commercial Code and the Restatement, unless the language or circumstances indicate otherwise, an assignment of "the contract" refers to the transfer of both rights and duties. Therefore, option C is the correct answer.

Question 20

According to the Restatement,unless circumstances indicate the contrary,a contract term prohibiting assignment of the contract bars both the assignment of rights and the delegation to the assignee of the assignor's duty of performance.

Accepted Answer

The answer of According to the Restatement,unless circumstances indicate the...

Quiz 16: Third Parties to Contracts