Deck 16: Third Party Rights

Question 1

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

Answer 1

True

Question 2

Oral assignments are prohibited.

Answer 2

False

Question 3

An assignment of an insurance policy cannot be prohibited.

Answer 3

False

Question 4

The rights under a contract for personal service normally can be assigned.

Question 5

A right to receive damages on a breach of a contract for a sale of goods may be assigned.

Question 6

To be enforceable, any assignment must be in writing.

Question 7

An assignee can compel the obligor to perform.

Question 8

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

Question 9

A transfer of contract rights to a third party is an obligator.

Question 10

An unconditional assignment of rights in a contract will extinguish the rights of the as?signor.

Question 11

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

Question 12

Privity of contract is the principle under which contracting parties alone traditionally had rights and liabilities under their contract.

Question 13

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

Question 14

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

Question 15

Generally, a party may not delegate his or her duties under a contract.

Question 16

An assignment of a negotiable instrument is generally prohibited.

Question 17

Notice is not legally required to establish the validity of an assignment.

Question 18

Privity of contract refers to the privacy that contracting parties should maintain with respect to their contract.

Question 19

Alienation is a transfer of the ownership of land.

Question 20

An assignment is effective only after notice is given to the obligor.

Question 21

A creditor beneficiary has the power to sue the promisee if the contract is breached.

Question 22

A delegation relieves the party making it of the obligation to per?form even if the party to whom the duty is delegated fails to perform.

Question 23

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

Question 24

A third party beneficiary contract is formed only when the parties to a contract intend to con?fer a benefit on a third party.

Question 25

An intended beneficiary is entitled to enforce the promise of a promisor.

Question 26

A "donee" beneficiary is always an "incidental" beneficiary.

Question 27

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

Question 28

A creditor beneficiary can sue directly to enforce a promisor's promise.

Question 29

A life insurance contract is a third party benefi?ciary contract involving a donee beneficiary.

Question 30

The rights of a third party bene?ficiary under a contract are subject to any express reservation of rights in the contract to the original parties.

Question 31

Alienation is a transfer of contract rights between citizens of different nations.

Question 32

To be enforceable, a delegation of duties must be in writing.

Question 33

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

Question 34

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

Question 35

If a contract benefits a third party incidentally, the third party has the power to enforce the contract.

Question 36

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

Question 37

An incidental beneficiary is not entitled to enforce the promise of a promisor.

Question 38

A third party beneficiary contract is formed when a contract con?fers a benefit on any third party.

Question 39

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

Question 40

A donee beneficiary can never sue to enforce the promise of a promisor.

Question 41

Owen and Paula enter into a contract under which Owen agrees to cater Paula's wedding in exchange for a cash down payment, a postdated check, and a possible interest in an apartment. The contract expressly prohibits any transfer of rights. The rights may be transferred if the transfer involves

A) a right to receive money, a negotiable instrument, or rights in real estate.
B) a right to receive money or a negotiable instrument only.
C) rights in real estate only.
D) none of the choices.

Question 42

Trudy and Uri enter into a contract for the sale of Trudy's house for which Uri agrees to pay her $250,000. Uri wants to transfer his right to the ownership of the house to Val, his niece. This transfer

A) is prohibited.
B) may be oral or written.
C) must be implied.
D) must be in writing.

Question 43

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 prohibitee.

Question 44

Julio contracts to provide lawn-mowing services to Kevin for $140 per month. Julio can?not transfer this duty

A) under any circumstances.
B) without continuing to be potentially liable.
C) without Kevin's consent.
D) without paying Kevin at least one monthly fee.

Question 45

Clem attempts to free himself from the duties of his contract with Dru by telling Dru 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 46

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) an obligato.
D) prohibited.

Question 47

Riley and Sheila enter into a contract for the sale of Riley's condominium to Sheila. Sheila transfers her right to be recorded as the owner of the property to her daughter Tricia. This transfer is

A) a delegation.
B) an assignment.
C) an accord and satisfaction.
D) a negotiation.

Question 48

A contract between Computers, Inc., and Digital Corporation contains a clause stating that any assignment is "void." This effectively prohibits

A) any assignment.
B) no assignment.
C) only an assignment that does not include payment of consideration.
D) only an assignment that would increase the risk of nonperformance.

Question 49

Milo and Nate enter into a contract for the closing of a sale of Milo's warehouse. When Nate's schedule conflicts, he asks Ollie to perform his duties at the closing. This transfer of duties is

A) a delegation.
B) an assignment.
C) an accord and satisfaction.
D) a negotiation.

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 prohibitee.

Question 51

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 52

Musical Production Company and Nora enter into a contract for Nora to write six songs for which Musical 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 53

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

A) a delegation.
B) an assignment.
C) an obligato.
D) prohibited.

Question 54

Manny wants to transfer his rights under a contract with Nila to Opie. To ensure that the transfer is valid, Manny must

A) designate Opie as a "delegate."
B) file a notice of assignment in the public records.
C) tell Nila that he has no rights and no liability under the contract.
D) none of the choices.

Question 55

Basil, a world-famous chef, signs a contract to give lessons in French cooking to Marge. Basil wants to transfer his duties under the con?tract to Harv, the operator of a hot dog concession. The transfer is

A) valid.
B) valid only if Harv is a highly regarded barbecue chef.
C) not valid because performance of the contract depends on Basil's unique skills.
D) not valid only if Marge detests barbecued foods.

Question 56

Floyd and Gert enter into a contract by which Floyd promises to deliver fer?tilizer to Gert. Floyd subsequently transfers this duty to Hiram. Floyd is

A) a delegatee and an obligee.
B) a delegatee but not an obligee.
C) a delegator and an obligor.
D) a delegator but not an obligor.

Question 57

Ralph and Sven enter into a contract under which Sven agrees to guide Ralph's expedition through Tibet for which Ralph agrees to pay Sven. This contract may not be assigned if

A) the assignment will significantly change the risk of nonperformance.
B) the assignment is expressly prohibited by the terms of the contract.
C) the contract is uniquely personal in nature.
D) any of the choices.

Question 58

Bret and Cory enter into a contract for the sale of Bret's textbook at the end of the fall semester for which Cory agrees to pay Bret $60. Cory wants to transfer her right to payment for the book to Del. This transfer

A) is prohibited.
B) may be oral or written.
C) must be implied.
D) must be in writing.

Question 59

Reba and Sly enter into a contract by which Reba promises to deliver newly printed marketing brochures to Sly. Reba later transfers her duty under the contract to Troy. Reba is

A) a delegator and an obligor.
B) a delegator only.
C) an obligor only.
D) none of the choices.

Question 60

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 transfer his contract duties 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 61

Jon promises to paint Key's house in exchange for Lila's promise to plant trees on Jon'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 62

Dina and Elle agree that Elle can satisfy a preexisting debt owed to Dina by pay?ing the money directly to Fava. The designation of this con?tract as a third party benefi?ciary contract is determined by the intent to benefit

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

Question 63

Betty assigns her right to payment of a loan to Cody. Cody is

A) a creditor beneficiary.
B) a debtor beneficiary.
C) a donee beneficiary.
D) a donor beneficiary.

Question 64

Xtra Finance Company is a creditor beneficiary in a deal that involves Yvon and Zack. Xtra, like most creditor beneficiaries, is

A) a donee beneficiary.
B) an incidental beneficiary.
C) an intended beneficiary.
D) none of the choices.

Question 65

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) not a delegation, an assignment, or a third party beneficiary contract.

Question 66

Fact Pattern 16-A1
Business Properties, Inc. , contracts with Corporate Builders, Inc., to construct an office building. BPI agrees to obtain insurance to cover the project, after which the parties waive their rights against the subcontractors. BPI ob?tains the policy from Debit Insurance Company. When the new building is destroyed in a storm, Debit pays BPI and files a suit against the subcontractors.
Refer to Fact Pattern 16-A1. Enterprise Corporation is the owner of an adjacent building, the value of which increased when BPI's new of?fices were built. Debit files a suit against Enterprise, claiming that Enterprise's neg?ligence con?tributed to the collapse of BPI's new building. Under the rea?soning of the court in Case 16.2, Midwestern Indemnity Co. v. Systems Builders, Inc., in relation to the waiver in BPI's contract with Corporate Builders, Enterprise would be

A) an incidental beneficiary and thus not liable to Debit.
B) an incidental beneficiary and thus possibly liable to Debit.
C) an intended beneficiary and thus not liable to Debit.
D) an intended beneficiary and thus possibly liable to Debit.

Question 67

Fact Pattern 16-A1
Business Properties, Inc. , contracts with Corporate Builders, Inc., to construct an office building. BPI agrees to obtain insurance to cover the project, after which the parties waive their rights against the subcontractors. BPI ob?tains the policy from Debit Insurance Company. When the new building is destroyed in a storm, Debit pays BPI and files a suit against the subcontractors.
Refer to Fact Pattern 16-A1. Under the reasoning of the court in Case 16.2, Midwestern Indemnity Co. v. Systems Builders, Inc., in relation to the waiver in BPI's contract with Corporate Builders, the subcontractors are

A) incidental beneficiaries and thus liable to Debit.
B) incidental beneficiaries and thus not liable to Debit.
C) intended beneficiaries and thus liable to Debit.
D) intended beneficiaries and thus not liable to Debit.

Question 68

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 69

Fact Pattern 16-B1
Bayside Construction Company enters into a contract with Clio to remodel Dewey's Home Store, using products from Eagle Building Supplies. Fresh Food Cafe is next to Dewey's Home Store. The remodeling is a gift from Ben to Dewey.
Refer to Fact Pattern 16-B1. The value of Fresh Food's property will increase after Dewey's store is remodeled. Fresh Food is

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

Question 70

Fact Pattern 16-B1
Bayside Construction Company enters into a contract with Clio to remodel Dewey's Home Store, using products from Eagle Building Supplies. Fresh Food Cafe is next to Dewey's Home Store. The remodeling is a gift from Ben to Dewey.
Refer to Fact Pattern 16-B1. Halfway through the project, Bayside refuses to finish the job. The contract can be enforced against Bayside by

A) Clio only.
B) Clio or Dewey only.
C) Clio, Dewey, or Eagle only.
D) Clio, Dewey, Eagle, or Fresh Food.

Question 71

Nick and Roberta contract for the sale of computer equipment, reserving the right to al?ter 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 72

Frank and Green Agri-Ship, Inc., enter into a contract for Green to transport a silo of soybeans for which Frank agrees to pay Green. When Green's schedule conflicts, Green contacts Hybrid Crop Transport Company, to which Green "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 73

Fact Pattern 16-B1
Bayside Construction Company enters into a contract with Clio to remodel Dewey's Home Store, using products from Eagle Building Supplies. Fresh Food Cafe is next to Dewey's Home Store. The remodeling is a gift from Ben to Dewey.
Refer to Fact Pattern 16-B1. Dewey is

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

Question 74

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) none of the choices.

Question 75

Chaz and Dolly enter into a contract under which Chaz agrees to provide maintenance services for Dolly's Ski Resort. Duties under the contract may not be transferred if

A) performance by a third party will vary materially from the per?formance ex?pected by the obligee under the contract.
B) performance depends on the personal skills or talents of the obligor.
C) special trust has been placed in the obligor.
D) any of the choices.

Question 76

Fact Pattern 16-B1
Bayside Construction Company enters into a contract with Clio to remodel Dewey's Home Store, using products from Eagle Building Supplies. Fresh Food Cafe is next to Dewey's Home Store. The remodeling is a gift from Ben to Dewey.
Refer to Fact Pattern 16-B1. Eagle will realize a profit from the sale of prod?ucts to Bayside to remodel Dewey's store. Eagle is

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

Question 77

Lois takes out a life insurance policy with Mega Insurance Corporation that names her son, Nero, as the bene?ficiary. This is

A) a delegation.
B) an assignment.
C) a third party incidental beneficiary contract.
D) a third party intended beneficiary contract.

Question 78

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) none of the choices.

Question 79

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 80

Dale signs a contract with Everbest Insurance Company that intentionally confers a benefit on Flo. Flo'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.