Question 1

After an assignment, only the assignee has a right to the obligor's performance.

Accepted Answer

This is the basic rule of assignment under the law of contracts. Once an assignment is made, the assignor (original party to the contract) no longer has the right to demand performance from the obligor (other party to the contract). Only the assignee (new party to the contract) can demand performance from the obligor.

Question 2

In a third-party beneficiary contract, the third party's rights arise at the time the contract is formed.

Accepted Answer

In a third-party beneficiary contract, the third party's rights are established at the time the contract is formed. This means that the third party has a legal right to enforce the contract and receive its benefits.

Question 3

In England and in a minority of states, the first of two or more assignees to give notice to the obligor is entitled to the assigned performance.

Accepted Answer

This is known as the "first in time, first in right" rule and is recognized in England and a minority of US states.

Question 4

When the assignee gives consideration in exchange for an assignment, there is a contract between the assignor and the assignee that prevents the assignor from revoking the assignment without the assent of the assignee.

Accepted Answer

This statement is true. If the assignee gives consideration in exchange for an assignment, there is a contract between the assignor and the assignee. This contract prevents the assignor from revoking the assignment without the assent of the assignee. Consideration can be in the form of money, services, or other value given by the assignee to the assignor in exchange for the assignment.

Question 5

When the rights under a contract are highly personal, they are not assignable.

Accepted Answer

Highly personal rights cannot be transferred or assigned to another person or entity under a contract. These rights include things like personal services, personal relationships, and unique talents or abilities that cannot be replaced by another party.

Question 6

When a partial assignment is made, the obligor may require all the parties entitled to the promised performance to litigate in one action any issues concerning the contract performance.

Accepted Answer

This is true as per the Uniform Commercial Code (UCC) Section 9-318, which states that if a partial assignment of a contract is made, the obligor can require all parties entitled to the performance to litigate any issues concerning contract performance in one action. This helps to avoid multiple lawsuits and streamline the dispute resolution process.

Question 7

A party delegating his duty to a third party is known as a delegator.

Accepted Answer

This statement is true. A party who delegates their duty to someone else is known as a delegator.

Question 8

A duty may not be delegated if there is an express provision in a contract against delegation.

Accepted Answer

If a contract expressly prohibits delegation, then the duty cannot be transferred to another party. It is important to always review contracts carefully to ensure that delegation is allowed or prohibited, depending on the specific circumstances.

Question 9

The UCC prohibits assignments of $5,000 or more.

Accepted Answer

The UCC does not prohibit assignments of any amount, but it provides guidelines for how assignments should be executed.

Question 10

Article 9 of the UCC makes waiver-of-defense clauses effective against assignees in consumer transactions.

Accepted Answer

Article 9 of the Uniform Commercial Code (UCC) generally governs secured transactions but does not make waiver-of-defense clauses effective against assignees in consumer transactions. Consumer protection laws often limit or prohibit such waivers to protect consumers.

Question 11

An obligor may assert rights of setoff arising out of entirely separate matters that he might have against the assignor, as long as the matters arose before he had notice of the assignment.

Accepted Answer

An obligor is allowed to assert rights of setoff arising out of separate matters against the assignor if they arose before notice of the assignment was received.

Question 12

Under Article 2 of the UCC, a right to damages for breach of the whole contract can be assigned despite a contractual provision to the contrary.

Accepted Answer

According to Article 2 of the UCC, a right to damages for breach of the whole contract can be assigned even if there is a provision in the contract prohibiting assignment. Therefore, the statement is true.

Question 13

A person who owes a duty under a contract is an obligee.

Accepted Answer

A person who owes a duty under a contract is known as the obligor, while the obligee is the party to whom the duty, or obligation, is owed.

Question 14

The Coastal Opera Company has a contract with a famous tenor to perform in its production of La Boheme .If the tenor chooses, he may delegate his duties under the contract to an equally well-known tenor.

Accepted Answer

Under contract law, personal service contracts, especially those involving unique skills or talents like those of a performer, generally cannot be delegated to another party without the consent of the party who contracted for the services.

Question 15

Assignments that materially increase the risk, duty, or burden on the obligor will nonetheless remain effective and enforceable.

Accepted Answer

Assignments that materially increase the risk, duty, or burden on the obligor are generally not enforceable because they alter the terms of the original contract without the obligor's consent.

Question 16

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

Accepted Answer

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

Question 17

In some states, the vesting of a third party's rights occurs only when the third party learns of the contract and assents to it.

Accepted Answer

This concept is known as "implied ratification" and is recognized in some states as a means of vesting a third party's rights in a contract.

Question 18

If a contract explicitly provides that it may be assigned, then rights under it are assignable even if the assignment would change the duty, risk, or burden of performance on the obligor.

Accepted Answer

If a contract explicitly provides for assignability, then the rights under the contract can be assigned regardless of any change in duty, risk, or burden of performance on the obligor. This principle is known as the rule in delegation of duties.

Question 19

Assignment of rights is the voluntary transfer to a third party of the rights arising from a contract.

Accepted Answer

Assignment of rights is indeed the voluntary transfer of the rights arising from a contract to a third party.

Question 20

The student government of State University has a contract with a famous rock band to perform at the university on homecoming weekend.The band cannot assign its rights and delegate its duties under this contract.

Accepted Answer

This indicates that the contract has a clause stating that the band cannot transfer or assign its rights and duties to another party without the consent of the student government.

Quiz 16: Third Parties to Contracts