Question 1

Courts will enforce contracts for the benefit of all but which of the following?

Accepted Answer

Courts typically enforce contracts for the benefit of donee beneficiaries, creditor beneficiaries, and intended beneficiaries because these parties are recognized as having enforceable rights under the contract. Incidental beneficiaries, however, do not have enforceable rights because the benefits they receive from the contract are unintended and incidental, not a result of specific intent by the parties to the contract to benefit them.

Question 2

A(n) is a third party who obtains possible benefits but no rights under a contract.

Accepted Answer

An incidental beneficiary is a third party who may receive some sort of benefit from the contract, but has no legal rights or claims to enforce the terms of the contract.

Question 3

Stark enters into a contract with a contractor to build a large shopping mall in River City.Donner will benefit from this contract since his restaurant is adjacent to the planned mall.Donner in this instance is a(n):

Accepted Answer

Donner is an incidental beneficiary because he benefits from the contract indirectly and has no rights to enforce the contract.

Question 4

Theresa has a contract to teach eighth grade at Washington Middle School.She decided she could make more money writing a book, so she assigns her teaching contract to her friend, Stephanie, who is also a licensed teacher.The duties under the teaching contract:

Accepted Answer

Teaching contracts are typically considered personal in nature and nondelegable. However, if the school district agrees to accept Stephanie's services, a novation could occur, relieving Theresa of her obligations.

Question 5

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

Accepted Answer

Professor Dought's mother is a donee beneficiary because she is the intended recipient of the life insurance proceeds.

Question 6

Betty owes Agatha $1,000.On March 1 Agatha, for value, assigned the debt to Clara.Thereafter, on March 30, Agatha assigned the same right to Diane.Under the:

Accepted Answer

The answer of Betty owes Agatha $1,000.On March 1 Agatha,...

Question 7

Annette entered into a contract with a local truck dealer to have a new truck delivered to her daughter, Sue, as a graduation present.In this contract, Sue is:

Accepted Answer

Sue is a donee beneficiary as the contract specifies that the new truck is to be delivered to her as a graduation present. She will directly benefit as a gift recipient.

Question 8

Which of the following duties would not be delegable?

Accepted Answer

Duties that require personal skills or judgments, such as teaching a class, are typically not delegable because they are based on the unique abilities or qualifications of the individual contracted to perform them.

Question 9

A promisor may assert the defense of contractual modification or rescission, even if an intended beneficiary's rights
have vested.

Accepted Answer

The answer of A promisor may assert the defense of...

Question 10

The party to whom a contractual duty of performance is owed is known as the:

Accepted Answer

Obligee is the party to whom a contractual duty of performance is owed. Obligor is the party who owes the duty of performance. Assignee and assignor refer to the transfer of rights or duties under a contract, which may or may not involve an obligee or obligor.

Question 11

Anita owes Brad $75,000.Brad signs a written statement granting Glen a gratuitous assignment of his rights from Anita.Brad delivers the signed statement to Glen before Brad dies.The assignment is:

Accepted Answer

The assignment is irrevocable because Brad delivered the signed statement to Glen, indicating his intention to transfer his rights to Glen.

Question 12

A(n)

Accepted Answer

Novation is the process of replacing an existing contract with a new one, transferring all rights and obligations to a new party, unlike assignment or delegation which do not replace the original contract.

Question 13

Bill wants to buy a new car.He goes to the bank to get a loan for the purchase, and signs an agreement to pay $10.00 per month in premiums on a term life insurance policy which names the bank as the recipient of the policy proceeds in the event of his death before the loan is repaid.The bank is a(n):

Accepted Answer

The bank is a creditor beneficiary because the life insurance policy is intended to benefit the bank by ensuring the loan is repaid if Bill dies before paying it off.

Question 14

As a general rule, most contract rights are assignable.

Accepted Answer

Most contract rights are assignable unless the contract language specifically prohibits or limits assignment. However, there are some exceptions such as personal service contracts and contracts involving unique or specialized goods or services.

Question 15

Bill has a right against Heather and assigns it for $100 to Dan.Later, Bill grants Heather a release.Bill:

Accepted Answer

Bill is liable to Dan for damages because by granting Heather a release, he impaired the value of the right he had assigned to Dan. This action breaches the implied warranty that comes with an assignment, which includes the warranty that the assignor will not do anything to impair the value of the assigned right.

Question 16

Unless otherwise provided by statute, an assignment may be oral.

Accepted Answer

An assignment can be oral unless a statute says otherwise.

Question 17

The voluntary transfer of a contractual right to a third party is known as a(n):

Accepted Answer

The voluntary transfer of a contractual right to a third party is known as an assignment. Implied warranty refers to the guarantees that are not explicitly stated in a contract but are implied by law. Delegation involves the transfer of duties, not rights. Novation is the substitution of a new contract for an old one.

Question 18

As a general rule, partial assignments of contract rights are not enforceable.

Accepted Answer

Partial assignments of contract rights can be enforceable if the contract allows it and the parties involved consent to the partial assignment.

Question 19

A partial assignment is a transfer of a portion of the contractual rights to one or more assignees.

Accepted Answer

A partial assignment allows for a transfer of only a portion of the contractual rights to one or more assignees.

Question 20

A(n) is an intended beneficiary of a contract who receives the benefits of the contract as a gift.

Accepted Answer

A donee beneficiary is an intended beneficiary who receives the benefits of the contract as a gift.

Quiz 16: Third Parties to Contracts