Deck 17: Third Persons and Contracts

Question 1

An assignee of a contract can bring suit on the contract only in the name of the assignor.

Answer 1

False

Question 2

The beneficiary of a life insurance policy is not subject to any policy restrictions that had been agreed to between the insured and the insurance company.

Answer 2

False

Question 3

Generally, an assignment must be in writing and signed by both parties.

Answer 3

False

Question 4

The right to file a legal claim may not be assigned.

Question 5

An assignment is a transfer of duties, and a delegation is a transfer of rights.

Question 6

Only parties who actually signed a contract may sue on it.

Question 7

A third person automatically has the status of an intended third-party beneficiary regardless of the parties' intentions at the time of contracting.

Question 8

An incidental beneficiary has the right to sue either party if there is a breach of contract.

Question 9

An assignment, if otherwise valid, takes effect the moment it is made.

Question 10

A person entitled to receive money may generally assign that right to another person.

Question 11

Whenever a contract is intended to benefit a third person, the third person is referred to as a delegator.

Question 12

The rights of an intended third-party beneficiary are destroyed if the contract is discharged in bankruptcy proceedings.

Question 13

It is necessary that a third-party beneficiary be identified by name.

Question 14

When work is guaranteed by one who repairs a building, the owner, on selling the building, may assign the guarantee to the buyer.

Question 15

In general, one may assign rights if that does not cause the obligor's duties to increase or change materially.

Question 16

Bruce is a donee beneficiary to a life insurance contract if he is listed as the beneficiary.

Question 17

Only written words that show an intention to transfer or assign will be given the effect of an assignment.

Question 18

The rights of a third-party beneficiary always cannot be destroyed without that beneficiary's consent.

Question 19

If a municipality contracts with a contractor to pave a street, the homeowners on that street are third-party beneficiaries of the contract.

Question 20

Intended beneficiaries and creditor beneficiaries can be the same person.

Question 21

In a contract in which a tenant borrowed money from a bank for the purpose of adding a bathroom to her apartment, the landlord is:

A) a direct beneficiary.
B) in privity of contract with the tenant.
C) a third-party beneficiary.
D) an incidental beneficiary.

Question 22

In general, an assignee stands:

A) in a position subordinate to the assignor.
B) exactly in the position of the assignor.
C) in a position superior to the assignor.
D) in a position similar to, but not equal to, the assignor.

Question 23

Which of the following is not a third-party beneficiary contract?

A) a contract in which A hires B to give A's niece piano lessons
B) a contract to repair sewers in front of Macy's Department Store
C) a life insurance contract with a named beneficiary
D) a contract between X and Y for Y to install a new door on Z's home

Question 24

A third-party beneficiary:

A) may be obligated to pay for services rendered.
B) may bring suit on and enforce the contract.
C) must consent to the contract.
D) must be identified by name.

Question 25

When a lease is assigned, the assignee becomes the sole obligor for rent payments, and the original lessee is discharged from the lease.

Question 26

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

A) incidental beneficiary.
B) donee beneficiary.
C) creditor beneficiary.
D) assignee.

Question 27

When a buyer assigns the right to goods under a contract, the buyer's liability to make payment to the seller is:

A) transferred to the third party.
B) terminated.
C) still in effect.
D) shared equally with the third party.

Question 28

If there is a time limitation or any other restriction in a contract, a third-party beneficiary:

A) may ignore it.
B) may void it.
C) is bound thereby.
D) must consent to be bound thereby before it is effective.

Question 29

The making of an assignment relieves the assignor of any and all obligations existing under the original contract.

Question 30

Under the UCC, an assignment of all the assignor's rights under a contract generally is held to be both an assignment of rights and a delegation of duties.

Question 31

An assignment of royalties to a song:

A) is a contract.
B) requires consideration.
C) is a transfer of rights.
D) is not enforceable.

Question 32

Alberto enters into a contract with a contractor to build a parking garage in Gotham City. Stop-N-Go will greatly benefit from this contract since Alberto's parking garage is adjacent to Stop-n-Go. In this scenario Stop-n-Go is:

A) an incidental beneficiary.
B) a partial beneficiary.
C) a donee beneficiary.
D) an implied beneficiary:

Question 33

A third-party beneficiary contract may be amended:

A) without the consent of the beneficiary.
B) by operation of law.
C) regardless of whether the contract allows modifications without the beneficiary's consent.
D) automatically when either party dies.

Question 34

An incidental beneficiary of a contract:

A) can sue to enforce the contract.
B) cannot sue to enforce the contract.
C) is a beneficiary specifically named in the contract.
D) is an assignee of the direct beneficiary.

Question 35

When duties under a contract are delegated, the party making the delegation remains responsible for the performance of the contract just as though no delegation had been made.

Question 36

A person who has a right to buy on credit can transfer that right to a close relative.

Question 37

An obligor required to render a performance under a contract can transfer the duty to perform to another person whenever desired.

Question 38

The party making an assignment is called the:

A) assignee.
B) assignor.
C) obligor.
D) successor.

Question 39

An assignee's rights are the same as those that had been possessed by the assignor.

Question 40

A life insurance contract is a third-party:

A) beneficiary contract.
B) assignment contract.
C) payment contract.
D) performance contract.

Question 41

An assignment is valid only if:

A) it is in a particular form.
B) it is written.
C) there is a manifestation of the intent to assign.
D) the assignment is paid for by the assignee.

Question 42

Walker Meeks is currently a party to two contracts. On the first contract, he has agreed to paint a portrait of a gentleman riding a horse. This portrait is for the wall of the gentleman's study. The gentleman chose Meeks for his realism in portraying the true feelings behind portrait models. Meeks' second contract is to paint the house of Sylvia Sneed.?Meeks is offered an employment contract for a large sum of money. He wishes to accept, but this would render him unable to complete the aforementioned contracts. Meeks delegates the painting of the portrait to his friend Bob, an impressionist, and delegates the painting of Sylvia's home to Ted, a professional house painter.?Neither the gentleman nor Sylvia intends to allow the delegation to occur. Comment on the probable outcome of the dispute.

Question 43

Which of the following duties would most likely not be delegable?

A) Joe has a contractual duty to pay Izzie $50.
B) Ken has a contractual duty to deliver 50 bushels of corn to Martin by October 1.
C) Andy has a duty to teach an accounting class at a community college during the fall semester.
D) Josh has a duty to mow Genelle's lawn at least once a week.

Question 44

The substitution of an old contract for a new one that replaces an obligation or a party for another is a:

A) novation.
B) warranty.
C) assignment.
D) delegation of duties.

Question 45

Unless language or circumstances indicate the contrary, a general assignment is:

A) a transfer of property only.
B) both a transfer of rights and a delegation of duties.
C) a delegation of duties only.
D) a transfer of rights only.

Question 46

A professor owned a home next door to a very dilapidated, neglected home. John Cataldo purchased the home next door and made a contract with Wizard Home Improvements for a complete renovation of the property. The professor was delighted because the improvement of the Cataldo home was upgrading the neighborhood and raising the value of the professor's home.?After making the last required payment on the contract, John Cataldo became seriously ill and ultimately was taken to a nursing home for care.?When Wizard learned of Cataldo's illness and confinement, Wizard ceased work on the Cataldo home. Because the outside renovation work had not been completed, the premises began to return to its former rundown condition. The professor ultimately sued Wizard as a third-party beneficiary of the contract between Cataldo and Wizard. What is the probable outcome of the lawsuit?

Question 47

The making of an assignment __________ the assignor of any obligation of the contract.

A) relieves
B) conditionally relieves
C) does not relieve
D) discharges

Question 48

Janet Jones sold the assets and liabilities of her coin-operated laundry to Kevin Katz for $10,000. The assets of the business included all of the washers and dryers. The liabilities included the amounts still owing on seven new dryers, which had been purchased recently from Dryer Company under an installment contract. Katz agreed to make the installment payments on the new dryers as they came due. After Katz failed to make an installment payment when it was due, Dryer Company sued Jones. Jones claimed she no longer was liable. How will the court decide?

Question 49

The delegator of construction duties remains liable if:

A) the delegatee performs the work properly, but the obligee did not approve of the delegation.
B) the delegatee performs the work improperly.
C) the obligee objects in writing to the delegatee's performance of the work, even if the delegatee performs the work properly.
D) the value of the contract is $500 or more and the delegatee performs the work properly.

Question 50

An obligor may delegate his or her duties to perform under a contract when the:

A) performance of the duty is standardized and nonpersonal.
B) obligor is unable to perform his or her duties.
C) contract is silent as to the right of assignment.
D) obligor is an expert in his or her specialized duties under the contract.