Deck 15: Third Party Rights

Question 1

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

Answer 1

True

Question 2

A transfer of contract rights to a third party is a delegation.

Answer 2

False

Question 3

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

Answer 3

True

Question 4

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

Question 5

The person to whom rights in a contract are assigned is the assignor.

Question 6

A contract cannot prevent the assignment of the right to receive funds.

Question 7

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

Question 8

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

Question 9

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

Question 10

Assignment and delegation occur after the original contract is made.

Question 11

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

Question 12

An unconditional assignment of rights in a contract will extinguish the rights of the assignor.

Question 13

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

Question 14

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

Question 15

A special form is required to create a delegation of duties.

Question 16

Banks may NOT assign their loan contracts to other firms.

Question 17

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

Question 18

An obligor is a person to whom a duty is owed.

Question 19

In a bilateral contract,the obligee has a right to require the other party to perform some task.

Question 20

All rights can be assigned.

Question 21

A life insurance contract involves an intended beneficiary.

Question 22

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

Question 23

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

Question 24

Evan's sale of rights he has under a contract with Federated Retail,Inc.,to buy the retailer's clothing overstock is

A)a delegation.
B)an assignment.
C)a third party beneficiary contract.
D)not a delegation,an assignment,or a third party beneficiary contract.

Question 25

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

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

Question 26

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

Question 27

A delegation relieves the party making it of the obligation to per?form.

Question 28

McCall and Teresa enter into a contract for the distribution of McCall's produce to local restaurants for which Teresa agrees to pay.McCall transfers his right to payment under the contract to Midtown Bank.This transfer is

A)a delegation.
B)an assignment.
C)a void contract.
D)prohibited by law.

Question 29

The vesting of contractual rights in a third party will always prevent the origi?nal parties to a contract from modifying it.

Question 30

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 31

A third party's rights under a contract vest when the conditions for vesting are satisfied.

Question 32

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 33

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

Question 34

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

Question 35

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

Question 36

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

Question 37

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

Question 38

An "as?signment of all rights" absolves the assignor of all liability under the contract that created the rights.

Question 39

If a contract benefits a third party only incidentally,the third party will not have the power to enforce the contract.

Question 40

A third party's right to control the details of performance of a contract indicates that the third party is an intended beneficiary.

Question 41

Equity Company and Faye enter into a contract for Faye to cater a meeting of Equity's shareholders.When Faye's schedule conflicts,she asks Gudren to serve Faye's coffee and pastries at the meeting.This transfer of duties is

A)a delegation.
B)an assignment.
C)a third party beneficiary contract.
D)prohibited by law.

Question 42

Wilma owes Jill $5,000.Jill assigns the claim to Andrew.Jill

A)must notify Wilma of the assignment immediately.
B)must notify Wilma of the assignment within thirty days.
C)must notify Wilma of the assignment to make the assignment effective.
D)is not legally required to notify Wilma of the assignment.

Question 43

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.

Question 44

Vicky contracts with Warren for the delivery of hospice services to benefit Xavier.This is

A)a delegation.
B)an assignment.
C)a third party beneficiary contract.
D)prohibited by law.

Question 45

Commercial Shipping,Inc.,and Dock Services Corporation enter into a contract for Dock to load Commercial's trucks for which Commercial agrees to pay Dock.Dock transfers its duty to load the trucks to East Harbor Transport Company.Dock is

A)a delegator.
B)an assignor.
C)a payor.
D)a third party beneficiary.

Question 46

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

Question 47

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)incidental.
D)assigned to a court.

Question 48

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

A)under any circumstances.
B)under no circumstances.
C)as long as she does so in writing.
D)if a court approves the assignment.

Question 49

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 50

Dwayne and Ewell enter into a contract for the design of an addition to Dwayne's house for which he agrees to pay Ewell.Ewell transfers his right to payment under the contract to Flex Construction Company.Flex is

A)a delegatee.
B)an assignee.
C)an obligee.
D)a third party beneficiary.

Question 51

Rural Development Corporation (RDC) and Sid enter into a contract for the clear-cutting of RDC's fifty-acre tract for which RDC agrees to pay Sid.Sid transfers his duty to log the tract under the contract to Timber Logging Company.Timber is

A)a delegatee.
B)an assignee.
C)an obligee.
D)a third party beneficiary.

Question 52

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 53

A contract between Lee and Mary 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 54

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 55

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)in breach of the contract with Joy.
C)liable to Joy if Leza does not perform.
D)liable to Leza for inducing a prohibited contract.

Question 56

Musica Production Company and Nora enter into a contract for Nora to write six songs for which Musica agrees to pay her.Nora transfers her right to payment under the contract to Omni Entertainment Agency.Nora is

A)a delegator.
B)an assignor.
C)a payor.
D)a third party beneficiary.

Question 57

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.

Question 58

Richly Retail Outlets,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 59

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.

Question 60

Phil and Mike enter into a contract that expressly prohibits delegation.Phil is the obligor and Mike is the obligee.Mike delegates his duties to Alex.Phil

A)cannot consent to the delegation under any circumstances.
B)can consent to the delegation by accepting Alex's performance.
C)must be notified of the delegation to make it effective.
D)cannot prevent Mike from delegating his duties.

Question 61

Fact Pattern 15-1 (Questions 29-31 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 15-1.Carol is

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

Question 62

Devon makes a contract with Edie that indirectly benefits Felipe.Neither Devon nor Edie intended this result.This is

A)a delegation.
B)an assignment.
C)a third party beneficiary contract.
D)not a delegation,an assignment,or a third party beneficiary contract.

Question 63

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

A)a delegation.
B)an assignment.
C)a third party beneficiary contract.
D)not a delegation,an assignment,or a third party beneficiary contract.

Question 64

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 65

Fact Pattern 15-1 (Questions 29-31 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 15-1.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 66

Ron makes a contract with Stu that indirectly benefits Tim,although nei?ther Ron nor Stu intended that result.Tim is

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

Question 67

Fact Pattern 15-1 (Questions 29-31 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 15-1.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 68

Jen is a third party beneficiary under a contract between Kyla and Leo.Kyla and Leo can modify or rescind their contract without Jen's consent

A)at any time.
B)at no time.
C)only after Jen's rights have vested.
D)only before Jen's rights have vested.

Question 69

Esther and Faisal agree that Esther will fix Faisal's car in exchange for his paying a preexisting debt owed by Esther to Gladys.Gladys is

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

Question 70

Dale and Elin sign a contract that intentionally confers a benefit on Federica.Federica's rights under the contract will vest

A)automatically.
B)if she manifests assent to the contract or materially al?ters her po?si?tion in detrimental reliance on it.
C)only if she manifests assent.
D)only if she materially alters her position in detrimental reliance.

Question 71

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 72

A-One Landscapers,Inc.,owes Friendly Finance Company $5,000. A-One enters into a contract with Suburban Office Park under which A-One promises to maintain the landscaping on Suburban's property. Un?der the contract,Suburban promises to pay Friendly Finance the amount that will be due A-One until A-One's debt to Friendly Finance is paid. A-One performs as promised,but Suburban does not pay Friendly Finance. Can Friendly Finance succeed in a suit against Suburban? Why or why not?