Deck 11: Third Party Rights and Discharge

Question 1

Any third party beneficiary to a contract who is not an intended beneficiary is incidental.

Answer 1

True

Question 2

An assignment of an insurance policy can be prohibited.

Answer 2

True

Question 3

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

Answer 3

False

Question 4

A delegation relieves the party making it of the obligation to perform.

Question 5

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

Question 6

An assignment of a negotiable instrument is generally prohibited.

Question 7

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

Question 8

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

Question 9

A contract can prevent the assignment of the right to receive funds.

Question 10

An "assignment of all rights" absolves the assignor of all liability under the contract that created the rights.

Question 11

An event must be certain to occur to constitute a contract condition.

Question 12

The assignment of the same contract right to two different parties results in their "splitting the difference."

Question 13

No special form is required to create a delegation of duties.

Question 14

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

Question 15

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

Question 16

An unconditional assignment of rights in a contract does not extinguish the rights of the assignor.

Question 17

All rights can be assigned.

Question 18

A promise to perform under a contract is never absolute.

Question 19

A right to receive damages on a breach of a contract for a sale of goods cannot be assigned.

Question 20

Most contracts are discharged by performance.

Question 21

The most common way to discharge a contract is by breach.

Question 22

A novation revokes and discharges a prior contract.

Question 23

Performance of an accord discharges an original contractual obligation.

Question 24

A condition subsequent terminates a party's promise to perform.

Question 25

Performance that provides a party with most of the benefits of a contract,in spite of a deviation from the terms,is complete performance.

Question 26

Tom and Sydney enter into a contract for the sale of Tom's house for which Sydney agrees to pay $350,000.Sydney wants to transfer her right to the ownership of the house to Rena,her niece.This transfer generally

A)cannot be prohibited.
B)cannot be allowed.
C)can be prevented.
D)can be circumvented.

Question 27

Anything less than substantial performance is a material breach of contract.

Question 28

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 prohibitee.

Question 29

Concurrent conditions occur only when the parties to a contract are required to perform their respective duties simultaneously.

Question 30

After a contract is made,a supervening event may make performance impossible and discharge the contract.

Question 31

Contracts that are executory on both sides can be rescinded by agreement.

Question 32

A party who substantially performs his or her duties under a contract can enforce the contract against the other party.

Question 33

Clem attempts to free himself from the duties of his contract with Drew by telling Drew to find someone else to perform them.This is

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

Question 34

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 righter.

Question 35

If a contract condition is not satisfied,the obligations of the contracting parties are discharged.

Question 36

If a contract requires performance to the personal satisfaction of a party,the party must in all cases be personally satisfied.

Question 37

Any breach of contract discharges the breaching party.

Question 38

When a contract party alters a written contract,the other party must adapt his or her performance accordingly.

Question 39

A contract will be discharged if foreseeable circumstances make it impossible to attain the contract's purpose.

Question 40

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 novation.
D)prohibited by law.

Question 41

Fact Pattern 11-1
Mutual Company enters into a contract to employ Neil as an investment manager for two years. During the first year, Neil is often absent without explanation and when present fails to adequately monitor and manage Mutual’s investments.



-Refer to Fact Pattern 11-1.Neil's performance is most likely

A)a material breach.
B)a minor breach.
C)Mutual's breach.
D)no breach.

Question 42

Belle enters into a contract to subdivide and sell housing lots in Cole's hillside field if Dell City annexes the property within the next year.Belle's duty to perform is

A)absolute.
B)conditional.
C)illusional.
D)irresolute.

Question 43

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 44

Xavier enters into a contract to operate a Yummy Yogurt franchise,which Yummy agrees to support as long as Xavier maintains his business license.Yummy's duty to perform is

A)absolute.
B)conditional.
C)licentious.
D)operational.

Question 45

Dina and Elle agree that Elle can satisfy a preexisting debt owed to Dina by paying the money directly to Fava.The designation of this contract as a third party beneficiary contract is determined by the intent to benefit

A)Dina,Elle,and Fava.
B)Dina only.
C)Elle only.
D)Fava only.

Question 46

Building Restoration,Inc.(BRI),enters into a contract to refurbish an old train depot for Casual Dining,Inc. ,to open as Eat Up Restaurant.If BRI completes most of the work promised in the contract,its performance will be

A)absolute.
B)complete.
C)material.
D)substantial.

Question 47

Frank and AgriShip,Inc. ,enter into a contract for AgriShip to transport a silo of soybeans for which Frank agrees to pay.When AgriShip's schedule conflicts,the firm contacts Hybrid Transport Company,to which AgriShip "assigns all rights under the contract." This transfer is

A)an assignment and a delegation.
B)an assignment only.
C)a delegation only.
D)neither an assignment nor a delegation.

Question 48

Lon enters into a contract to mine limestone in Mica's quarry,sell it,and share the profits on its sale with Mica.If the duties under this contract are discharged like those under most contracts,the duties will be

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

Question 49

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 novation.
D)prohibited by law.

Question 50

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 righter.

Question 51

Rural Development Corporation (RDC)and Smike enter into a contract for the clear-cutting of RDC's fifty-acre tract for which RDC agrees to pay Smike.Smike 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 prohibitee.

Question 52

Safe-T Guard Services enters into a contract to secure Taylor's Business Park from vandalism and theft between 6 p.m.and 6 a.m.nightly for six months.At the end of the term,if there has been no vandalism or theft in the Park,Safe-T's performance will have been

A)absolute.
B)complete.
C)conditional.
D)substantial.

Question 53

Fact Pattern 11-1
Mutual Company enters into a contract to employ Neil as an investment manager for two years. During the first year, Neil is often absent without explanation and when present fails to adequately monitor and manage Mutual’s investments.



-Refer to Fact Pattern 11-2.Under the circumstances,with respect to damages,Chris can

A)bring an action immediately.
B)bring an action only after the contract's two-year term begins.
C)bring an action only after the contract's two-year term ends.
D)do nothing.

Question 54

Fact Pattern 11-1
Mutual Company enters into a contract to employ Neil as an investment manager for two years. During the first year, Neil is often absent without explanation and when present fails to adequately monitor and manage Mutual’s investments.



-Refer to Fact Pattern 11-1.With respect to Mutual's duties,Neil's performance most likely

A)discharges Mutual from the contract.
B)has no effect on Mutual's performance.
C)increases Mutual's duties under the contract.
D)suspends Mutual's duty to perform.

Question 55

Ron makes a contract with Stu that indirectly benefits Tim,although neither Ron nor Stu intended that result.Tim is

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

Question 56

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 57

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 58

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 59

Nick and Roberta contract for the sale of computer equipment,reserving the right to alter a particular provision in the contract.The rights of any third party beneficiary of that contract are

A)not affected by the reservation.
B)limited to the extent of the reservation.
C)limited only if the beneficiary agrees to the reservation.
D)none of the choices.

Question 60

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)a novation.

Question 61

Flo agrees to work as Gary's personal accountant for one year but dies in the sixth month of the contract.Flo's estate

A)is discharged from any contractual liability.
B)must find a competent accountant to fulfill the contract.
C)must pay liquidated damages.
D)must refund any money paid to Flo on the contract.

Question 62

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 63

Super Toolmakers,Inc. ,contracts to sell its business to True Hardware Corporation.Before either party has performed,rescission of this contract requires

A)a mutual agreement to rescind.
B)consideration.
C)performance by all of the parties.
D)an accord and satisfaction.

Question 64

Fact Pattern 11-2
Bell Medical Education Service enters into a contract to employ Chris as an instructor for two years to begin May 1. One month before the term begins, Bell is underbid by a competitor and loses a major client, Delta Hospital Center. Bell now refuses to hire Chris.



-Refer to Fact Pattern 11-2.Bell's repudiation is most likely

A)a material breach.
B)a minor breach.
C)Chris's breach.
D)no breach.

Question 65

Sam contracts to harvest Tina's crop on August 1.Due to an unexpected regional fuel shortage,Sam cannot perform on the specified date.This

A)breaches the contract.
B)discharges the contract.
C)has no effect on the contract.
D)suspends the contract.

Question 66

Roy and Sheila are parties to a contract.They subsequently agree that Tony should take Roy's place and assume all of his rights and duties under the contract.This is

A)a novation.
B)an accord and satisfaction.
C)an assignment.
D)a modification.

Question 67

Mona and Nero want to discharge their contract by executing and performing a new agreement.They can best accomplish this by

A)accord and satisfaction.
B)novation.
C)reinvention.
D)specific performance.

Question 68

Fact Pattern 11-3
Haruko, who owns and operates Garden Orchard, agrees to sell Fresh Produce Cooperative ten bush¬els of apples.



-Refer to Fact Pattern 11-3.When the market price for apples exceeds the price in the contract with Fresh Produce,Haruko decides not to deliver the apples.This

A)breaches the contract.
B)discharges the contract.
C)has no effect on the contract.
D)suspends the contract.

Question 69

Superb Construction,Inc. ,contracts to build a store for Tasty Confection Company,with Tasty's payment due on June 1.On June 1,Tasty's bank is closed,and for this reason,Tasty claims it cannot pay Superb on time.In this situation

A)Tasty's bank is in breach of contract.
B)Tasty is in breach of contract.
C)the contract is discharged.
D)the contract is suspended.

Question 70

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 71

On April 1,OK Contractors,Inc. ,contracts to build a store for Lo-Cost Jewelers at a specific location in Metro City.On May 1,Metro changes its zoning laws to prohibit the construction of a commercial building at that location.When the store is not built,Lo-Cost files a suit against OK.In this situation

A)OK is in breach of contract.
B)Metro is in breach of contract.
C)the contract is discharged.
D)the contract is suspended.

Question 72

Fact Pattern 11-3
Haruko, who owns and operates Garden Orchard, agrees to sell Fresh Produce Cooperative ten bush¬els of apples.



-Refer to Fact Pattern 11-3.When bad weather destroys Garden Orchard's apple crop,Haruko's obligation to deliver apples to Fresh Produce is

A)breached.
B)discharged.
C)not affected.
D)suspended.