Deck 12: Third Party Rights and Discharge

Question 1

No contract can prohibit delegation of the duties of the contract.

Answer 1

False

Question 2

A life insurance contract involves an intended beneficiary.

Answer 2

True

Question 3

A transfer of contract duties to a third party is an assignment.

Answer 3

False

Question 4

All that a delegator needs to do to make a delegation effective is to express an intention to make the delegation.

Question 5

In an assignment,the party receiving the rights is known as the assignor.

Question 6

There are no exceptions to the rule that any duty can be delegated.

Question 7

Vested is the condition in which rights have taken effect and cannot be taken away.

Question 8

The only way that a party can discharge a contract is by performance.

Question 9

An incidental beneficiary can sue directly to enforce a promisor's promise.

Question 10

An assignment of rights in real estate often cannot be prohibited.

Question 11

As long as a contract is personal in nature,all rights under the contract can be assigned.

Question 12

A delegator is a party who transfers his or her obligation under a contract to another party.

Question 13

If a contract does not require that performance be rendered directly to a third party,the third party is an intended beneficiary.

Question 14

Banks may notassign their loan contracts to other firms.

Question 15

Privity of contract establishes the basic concept that third parties have no rights in contracts to which they are not parties.

Question 16

In most cases,a contract that prohibits its assignment cannot be assigned.

Question 17

An insurance policy is an example of a right that can be assigned.

Question 18

It is legally necessary to notify the obligor of any assignment of rights to a third party.

Question 19

A right can be assigned even if the assignment will significantly alter the risks or duties of the obligor.

Question 20

A novation does not require the extinguishing of the old obligation.

Question 21

Robert enters into a contract with Claire.Claire agrees to paint Robert's living room for $500.Claire is the

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

Question 22

Performance can be accomplished by tender.

Question 23

If one party's performance is substantial,the other party's duty to perform remains absolute.

Question 24

In most contracts,promises of performance are expressly qualified.

Question 25

Tender is a timely offer or expression of willingness to pay a debt or perform an obligation.

Question 26

A material breach occurs when performance is substantial,but not complete.

Question 27

Only personal contracts can be discharged by agreement of the parties.

Question 28

In most contracts,promises of performance are not expressly conditioned.

Question 29

In all contracts,absolute promises are expressly conditioned.

Question 30

A breach of contract occurs only when a party fails to perform all of his or her duties under a contract.

Question 31

Stephanie's sale of rights she has under a contract with Runway Retail,Inc.,to buy the retailer's clothing overstock is

A)a delegation.
B)an assignment.
C)a third party beneficiary contract.
D)none of the choices.

Question 32

Performance that provides a party with most of the benefits of a con-tract,in spite of a deviation from the terms,is substantial performance.

Question 33

Will owes Jenny $1,000.Brad owes Will $1,000.Will unconditionally assigns his rights to Jenny.Will's right to the $1,000 is then

A)unchanged.
B)extinguished.
C)extinguished.
D)assigned to a court.

Question 34

A novation occurs when there is a substitution,by agreement,of a new contract for an old one,with the rights under the old one being terminated.

Question 35

A party is entitled to cancel a contract based on the other party's material breach.

Question 36

Jayson and MaryElise enter into a contract.Jayson agrees to mow MaryElise's yard every week for the summer.MaryElise is the

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

Question 37

A novation requires the existence of a previous,valid obligation.

Question 38

A condition that must be fulfilled before a party's performance can be required is a concurrent condition.

Question 39

Regional Steel,Inc.,and Overland Transport Company enter into a con-tract. Smooth Oil Corporation,which will indirectly benefit from the deal,is prevented from having rights under the contract by the principle of

A)assignment.
B)delegation.
C)privity.
D)vesting.

Question 40

Objective impossibility discharges a contract.

Question 41

Fact Pattern 12-1 (Questions 15-17 apply)?Four-Square Construction Company enters into a contract with Ben to remodel Carol's Home Store,using products from Delta Building Supplies.Eatery Café is next to Carol's Home Store.The remodeling is a gift from Ben to Carol.
Refer to Fact Pattern 12-1.Delta will realize a profit from the sale of prod-ucts to Four-Square to remodel Carol's store.Delta is

A)a delegatee.
B)an assignee.
C)an incidental beneficiary.
D)an intended beneficiary.

Question 42

Tristan promises to paint Katy's house in exchange for Lila's promise to plant trees on Tristan's property.This is

A)a delegation.
B)an assignment.
C)a third party beneficiary contract.
D)none of the choices.

Question 43

Elton and Florida sign a contract by which Elton agrees to deliver and install a utility sink on May 15 in exchange for Florida's promise to pay the $250 price on May 15.The delivery and installation of the sink and the payment of the price are ex-amples of

A)conditions precedent.
B)concurrent conditions.
C)conditions subsequent.
D)implied conditions.

Question 44

A contract between Slim and Goldie may not be assigned if it

A)does not expressly permit assignment.
B)involves a sale of goods.
C)involves personal services.
D)is oral.

Question 45

Richly Merchandise,Inc.,contracts with Stand-Rite Contractors to build a store.Stand-Rite assigns the contract to Town Builders,which has a poor record of completing projects.Richly could most successfully argue that the con-tract cannot be assigned because

A)Richly did not consent to the assignment.
B)Richly did not receive adequate consideration for the assignment.
C)the assignment will materially increase the risk of nonperformance.
D)Town Builders was not an original party to the deal.

Question 46

Fact Pattern 12-1 (Questions 15-17 apply)?Four-Square Construction Company enters into a contract with Ben to remodel Carol's Home Store,using products from Delta Building Supplies.Eatery Café is next to Carol's Home Store.The remodeling is a gift from Ben to Carol.
Refer to Fact Pattern 12-1.The value of Eatery's property will increase after Carol's store is remodeled.Eatery is

A)a delegatee.
B)an assignee.
C)an incidental beneficiary.
D)an intended beneficiary.

Question 47

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 transfering his right to the ownership of the apartment because such a prohibition is

A)against public policy.
B)immoral.
C)unconscionable.
D)a crime.

Question 48

Leonardo contracts to install automatic watering troughs in Kendall's dairy barn.Leonardo 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)Leonardo only.
D)Jake or Leonardo.

Question 49

Fact Pattern 12-1 (Questions 15-17 apply)?Four-Square Construction Company enters into a contract with Ben to remodel Carol's Home Store,using products from Delta Building Supplies.Eatery Café is next to Carol's Home Store.The remodeling is a gift from Ben to Carol.
Refer to Fact Pattern 12-1.Carol is

A)a delegatee.
B)an assignee.
C)an incidental beneficiary.
D)an intended beneficiary.

Question 50

Dylan enters into a contract to manage the operations of Cash's accounting office for one year,renewable for subsequent one-year terms.If this contract is discharged like most contracts,it will be

A)breached.
B)rescinded.
C)altered.
D)performed.

Question 51

Carol enters into a contract to hire Joanne to paint a portrait of Carol's favorite cat.Joanne agrees to do the portrait to Carol's satisfaction for $100.When Joanne finishes the portrait,Carol announces that she is not satisfied with the portrait because it does not look like her cat.Carol

A)must accept the portrait and pay Joanne $100.
B)must accept the portrait and pay Joanne $50.
C)must accept the portrait and pay Joanne $25.
D)does not have to accept the portrait or pay Joanne any money.

Question 52

Kathleen offers to buy Richard's prize stallion for $10,000 only if a licensed veterinarian certifies that the horse is sound for breeding.After inspecting the stallion,the veterinarian concludes that the stallion is sterile and thus not fit for breeding.Kathleen

A)must still buy the stallion.
B)does not have to buy the stallion.
C)must still buy the stallion,but may pay a lower price.
D)does not have to buy the stallion,but must buy another horse of similar value from Richard.

Question 53

Valley View Farms enters into a contract to sell Sarah's Corner Shop a truckload of eggs from free range chickens.Valley View then fails to deliver the eggs to Sarah's Corner Shop.Sarah

A)must still pay for the eggs or she will be in breach of contract.
B)does not have to pay for the eggs because Valley View failed to perform.
C)must still pay for the eggs,but can file suit against Valley View for breach of contract.
D)does not have to pay for the eggs,but cannot file suit against Valley View for breach of contract.

Question 54

App Developers,Inc.(ADI),enters into a contract with Carmen,the chief executive officer of SalesCorp,to create an app for the firm.To fulfill the contract,ADI hires Max and ten other student interns.With respect to the contract,Max is

A)an intended beneficiary.
B)an incidental beneficiary.
C)a delegatee.
D)an assignee.

Question 55

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.Jack

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 priorty to payment in most states.

Question 56

Pat,a world famous musician and composer,agrees to give ten piano les-sons to Quinn in exchange for $1,000.Pat's attempt to delegate his con-tract to Ruth,an in-experienced pianist,will probably be

A)permitted because contracts may be freely delegated.
B)permitted because the contract is concerned with music lessons.
C)prohibited because contracts may not be freely delegated.
D)prohibited because Pat and Ruth have very different skill levels.

Question 57

Phil enters into a contract to hire Bob's Building Business to build a warehouse for Phil.The contract specifies that the warehouse should be built with HighQual Bricks.When construction starts,HighQual Bricks cannot provide enough bricks for the warehouse.Bob's Building Business substitutes Big Red Bricks,which are comparable in quality and price to HighQual Bricks.This deviation from the contract

A)discharges Phil from the contract.
B)has no effect on the contract.
C)increases Bob's Building Business's duties under the contract.
D)suspends Bob's Building Business's duty to perform.

Question 58

Jen agrees to buy Kev's Dirt Bike business on the express condition that Valley Credit Union approves the financing.This approval is

A)a concurrent condition.
B)a condition precedent.
C)a condition subsequent.
D)an implied condition.

Question 59

Phillip assigns his rights under a contract with Maria to his college roommate,John.Neither Phillip nor John 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.

Question 60

Jack contracts to provide lawn-mowing services to Lee.Jack can-not dele-gate this duty

A)because it is a personal service contract.
B)without continuing to be liable.
C)without Lee's consent.
D)without providing lawn-mowing services to Kim.

Question 61

Pam borrows $5,000 from Quality Auto Sales to buy a car. When Pam does not pay the loan or return the car,Quality wants to transfers the right to the payment to Rapid Collection Agency.Rapid agrees to pay Quality for this right,but for a price that is less than the amount owed.Can Quality transfer this right to Rapid without Pam's consent? If so,and Quality committed fraud in the deal with Pam,could Pam legiti-mately refuse to pay Rapid? Explain.

Question 62

Lily is a farmer.When bad weather destroys her crop,her obliga-tion to deliver it un-der an outstanding contract with Macro Food Corporation is

A)discharged.
B)completely enforceable.
C)enforceable only to the extent of finding an alterna-tive supply.
D)enforceable only to the extent of transferring to the next year's crop.

Question 63

Ellen contracts to buy six cases of vintage Fertile Valley wine from Grapes & Vines Winery for $1,200.The contract states that delivery is to be made at Ellen's residence "on or before May 1,to be used for daughter's wedding reception on May 2." On May 1,Grapes & Vines's delivery van is involved in an accident,no wine is delivered that day,and no one from Grapes & Vines tells Ellen.On the morning of May 2,Ellen buys the wine from Happy Hill Winery.That afternoon,just before the reception,Grapes & Vines tenders delivery of the wine at Ellen's residence.She refuses tender.Grapes & Vines sues her for breach of contract.How is the court most likely to rule?

Question 64

Rocko owes Sybil $1,000 for yard work Sybil performed for Rocko.The money is due on May 1.On April 30,Rocko goes to the bank to get the money and discovers that the bank will be closed until May 2.Rocko

A)will be in breach of contract when he fails to pay Sybil on May 1.
B)will not be in breach of contract when he fails to pay Sybil on May 1 due to objective impossibility.
C)is discharged from any contractual liability to Sybil.
D)will not be in breach of contract when he fails to pay Sybil on May 1 as long as he pays the $1,000 plus ten percent interest on May 2.

Question 65

Ben and Andrew are parties to a contract.They agree on a novation.The novation does not require

A)the existence of a previous,valid obligation.
B)agreement by all the parties to a new contract.
C)performance of the original contract by all of the parties.
D)a new,valid contract.

Question 66

Ruth contracts to provide Stan with fifty hours of telepathic personal coaching.The state legisla-ture sub-sequently passes a law making tele-pathic personal coaching illegal.This law will

A)discharge the contract.
B)fulfill the contract.
C)not affect the contract.
D)require immediate performance of the contract.

Question 67

Even-Bilt Construction contracts to build a warehouse for Discount E-Sales Company.Even-Bilt completely performs.Discount E-Sales is entitled to

A)an accord.
B)rescission.
C)novation.
D)nothing more.

Question 68

Barbara and Johann are parties to a contract.They agree on a novation.The novation requires

A)the existence of a previous,valid obligation.
B)consideration greater than $5,000.
C)performance of the original contract by all of the parties.
D)an accord and satisfaction.

Question 69

Red's Plumbing Service substantially performs its contract with Shady Grove Condominiums,Inc.Shady Grove is entitled to

A)damages.
B)nothing more.
C)repudiation.
D)alteration.

Question 70

Hal contracts with Credit Services,Inc.(CSI),to pay $500 for its serv-ices.After CSI performs,they sign an accord,in which Hal promises to pay $400 within ten days instead of the $500.Hal does not pay.CSI can sue Hal under

A)neither the accord nor the contract.
B)the accord only.
C)the accord or the contract.
D)the contract only.

Question 71

Juan and Isidro enter into a contract to buy,restore,and reopen the Coastal Park Carousel.Before either party begins to perform,they agree to cancel their deal.This is

A)substantial performance.
B)mutual rescission.
C)accord and satisfaction.
D)novation.

Question 72

Wilson owes Shelby $5,000 for repairs on Wilson's Bobcat Skidsteer.Wilson has financial troubles and he and Shelby sign an accord,in which Wilson promises to pay $4,000 and give Shelby his mountain bike within thirty days instead of the $5,000.Wilson's delivery of the bike and $4,000 to Shelby is

A)an accord.
B)satisfaction.
C)substantial performance.
D)novation.