Deck 13: Third-Party Rights and Discharge

Question 1

Wilma has signed a contract to purchase a car with 48 monthly payments.If she changes her mind she can assign the car and payment obligation to her friend Betty as long as Betty has sufficient income to make the payments.

Answer 1

False

Question 2

In order to be assignable,a contract usually must provide that the rights can be assigned.

Answer 2

False

Question 3

In an assignment of contract rights,the assignee takes no better rights under the contract that the assignor had.

Answer 3

True

Question 4

The right to sue another party for a violation of personal rights can usually be assigned.

Question 5

Contracts for the provision of personal services are generally not assignable without the permission of the obligor.

Question 6

Once an assignment is made,it is the duty of the assignor to notify the obligor so the obligor can deliver proper performance.

Question 7

The insured under an insurance policy usually cannot assign her rights to another person.

Question 8

Generally,no formalities are required for a valid assignment of rights.

Question 9

The transfer of contractual rights is called a delegation of rights.

Question 10

When there has been a valid assignment of rights,the assignee "stands in the shoes of" the assignor.

Question 11

Many professional athletes' contracts contain a clause permitting an assignment of the contract.

Question 12

In the United States,most contract rights are assignable.

Question 13

A legal right that arises out of a breach of contract may not be assigned.

Question 14

The unconditional assignment of a contract extinguishes all of the assignor's rights,including the right to sue the obligor directly for nonperformance.

Question 15

A contract can be assigned even if the assignment would materially alter the risk or duties of the obligor.

Question 16

An obligor is someone who owes a duty of performance.

Question 17

Future expected rights can be assigned just as present existing rights.

Question 18

With an assignment of rights,an obligee generally becomes an assignor when the right is assigned.

Question 19

Although the assignor often uses the word assign,other words or terms such as sell,transfer,convey,and give are sufficient to indicate intent to transfer a contract right.

Question 20

Usually,a person cannot assign a currently nonexistent right that he or she expects to have in the future.

Question 21

An anti-assignment clause is a clause that prohibits the assignment of rights under contracts.

Question 22

All duties can be delegated as long as the delegator promises to guarantee performance.

Question 23

Some courts permit the delegation of impersonal duties despite the existence of an anti-delegation clause.

Question 24

Where there is a valid delegation of duties but the delegatee has not assumed the duties under a contract,the delegation is called an assumption of duties.

Question 25

When an assignor makes an assignment of a right under a contract,the assignee is under a duty to notify the obligor that 1)the assignment has been made and 2)performance must be rendered to the assignee.

Question 26

An obligor can assert any defense he or she had against the assignor or the assignee.

Question 27

When a party improperly assigns the same contract rights to more than one assignee,the American rule provides that the earliest assignment in time prevails.

Question 28

Anti-assignment clauses are usually given legal effect.

Question 29

When the delegation of a duty is a declaration of duties,the delegatee becomes legally liable to the obligee to perform the duty.

Question 30

The "English rule" provides that the first assignment in time prevails,regardless of notice.

Question 31

When a delegator delegates duties,the delegator remains responsible for the performance of the duties.

Question 32

In a declaration of duties,the delegatee is not liable to the obligee for nonperformance or negligent performance,and the obligee cannot recover damages from the delegatee.

Question 33

If the assignee fails to provide notice of assignment to the obligor,the obligor may continue to render performance to the assignor,who no longer has a right to it.

Question 34

An approval clause requires that the obligor approve any assignment of a contract.

Question 35

Where a valid delegation of duties contains the term assumption or other similar language,there is a declaration of duties.

Question 36

An obligor can raise the defenses of fraud,duress,undue influence,minority,insanity,illegality of the contract,mutual mistake,or payment by worthless check of the assignor against enforcement of the contract by the assignee.

Question 37

An anti-assignment clause may be used if the obligor does not want to deal with or render performance to an unknown third party.

Question 38

The "American rule" provides that the first assignee to give notice to the obligor prevails.

Question 39

In an assumption of duties,the obligee can sue the delegatee and recover damages from the delegatee for nonperformance or negligent performance by the delegatee.

Question 40

A minority of states follow the "New York rule" of successive assignments.

Question 41

Generally,the public and taxpayers are intended third-party beneficiaries to contracts entered into by the government on their behalf.

Question 42

Anti-delegation clauses are seldom enforced by the courts.

Question 43

Third-party beneficiaries usually exist from the inception of a contract.

Question 44

The Restatement (Second)of Contracts refers to both donee and creditor beneficiaries as intended beneficiaries.

Question 45

If the promisor fails to perform in a donee beneficiary contract,the donee beneficiary can sue the promisor directly.

Question 46

An incidental third-party beneficiary can enforce the contract against the party who promised to render performance.

Question 47

If the transfer of a contract to a third party contains only language of assignment,the modern view holds that there is a corresponding delegation of the duties of the contract.

Question 48

Incidental third-party beneficiaries may be classified as either donee or creditor beneficiaries.

Question 49

Third-party beneficiaries are either intended or incidental beneficiaries.

Question 50

A contract for life insurance with a named beneficiary is an example of a donee beneficiary contract.

Question 51

The majority of provisions in contracts are covenants.

Question 52

A qualified promise is another name for a covenant.

Question 53

An incidental beneficiary has no rights to enforce or sue under other people's contracts.

Question 54

A covenant is an unconditional promise to perform.

Question 55

In many instances,the parties to a contract unintentionally benefit a third party when a contract is performed.In such situations,the third party is referred to as an incidental beneficiary.

Question 56

A creditor beneficiary cannot sue on the contract that made her a creditor beneficiary.

Question 57

An intended third-party beneficiary can sue to enforce the related contract.

Question 58

A promise that contains a condition that must be met before the promise is binding is known as a covenant.

Question 59

When parties enter into a contract,they can agree that the performance of one of the parties should be rendered to or directly benefit a third party.Under such circumstances,the third party is called an incidental third-party beneficiary.

Question 60

Only people specifically identified by name in a contract may have the rights of an intended beneficiary.

Question 61

A party's duty to perform under a contract may be discharged by mutual agreement of the parties,by impossibility of performance,by commercial impracticability,or by operation of law.

Question 62

A force majeure clause is used to specify the remedies in the event of a breach of contract.

Question 63

In a novation,only one of the original parties is replaced by a new party.

Question 64

The Restatement (Second)of Contracts eliminates the distinction between conditions precedent and conditions subsequent,and both are referred to as "conditions."

Question 65

With a substituted contract,all duties under the original contract are discharged immediately upon the formation of the substituted contract.

Question 66

When the "personal satisfaction test" is used for determining a condition precedent of satisfaction,the person can reject the performance even if a reasonable person would accept it.

Question 67

A contract that makes performance "satisfaction guaranteed or your money back" bases performance on a concurrent condition.

Question 68

Josh is having a house built and the contract specifies that the completion date is November 23??.If the builder doesn't complete the house until November 28??,the builder is not liable for damages unless a "time is of the essence" clause is part of the contractual conditions.

Question 69

Commercial impracticability allows discharge of a contract only if it is actually impossible to perform.

Question 70

An equitable condition is one that can be implied from the circumstances surrounding a contract and the parties' conduct.

Question 71

A condition subsequent exists when a contract provides that the occurrence or nonoccurrence of a specific event automatically excuses the performance of an existing duty to perform.

Question 72

If the contract requires the occurrence (or nonoccurrence)of an event before a party is obligated to perform a contractual duty,there is a condition precedent.

Question 73

Tom signs a contract to purchase Jerry's house.They settle on the house,executing the contract at 10:00 a.m.,and the house is struck by lightning at 2:00 p.m.,burning to the ground as a result.Tom may claim impossibility based on destruction of the subject matter and rescind the contract.

Question 74

Only a few states recognize the doctrine of commercial impracticability as an excuse for nonperformance of contracts.

Question 75

A statute of limitations puts a limit on the damages that can be sued for under a contract.

Question 76

Upon formation,an accord and a substituted contract both have the same effect on the duties of the original contract.

Question 77

If a contract requires the occurrence or nonoccurrence of an event before a party is obligated to perform a contractual duty,this is a condition antecedent.

Question 78

In order to be effective,a condition must be express.

Question 79

Recurrent conditions arise when the parties to a contract agree to render performance simultaneously.

Question 80

An accord and satisfaction discharges the original contract upon the formation of the accord.