Question 1

Under the Restatement, if there are successive assignments of the same right:

Accepted Answer

Under the Restatement (Second) of Contracts, the general rule is that the first assignee in time has the better right, unless a subsequent assignee gives value and takes certain additional steps to protect their interest.

Question 2

Which of the following involves a creditor beneficiary relationship?

Accepted Answer

In option A, the bank is a creditor beneficiary because the life insurance policy is intended to pay off the loan if the insured dies, directly benefiting the bank as a creditor.

Question 3

In which of the following situations is there a third party incidental beneficiary who would be unable to enforce the agreement?

Accepted Answer

In this situation, the doctor is an incidental beneficiary because the insurance contract is primarily between the insured and the insurance company. The doctor cannot enforce the agreement as they are not the intended beneficiary of the contract.

Question 4

Anita owes Brad $75,000. Brad signs a written statement granting Cal a gratuitous assignment of his rights from Anita. If Brad dies prior to delivering the statement to Cal:

Accepted Answer

The answer of Anita owes Brad $75,000. Brad signs a...

Question 5

Mary goes to her stockbroker, purchases 30 shares of P & G stock, and instructs the broker to register the stock in her husband Warren's name. If this stock is intended as a Valentine's gift, Warren becomes:

Accepted Answer

Warren becomes a donee beneficiary because Mary intended the stock as a gift for him, making him the beneficiary of her purchase.

Question 6

Which of the following is NOT true concerning the requirements for an effective assignment?

Accepted Answer

Consideration is not required for an assignment to be effective. An assignment can be valid without consideration, as it involves the transfer of rights from one party to another.

Question 7

In the case of Speelman v. Pascal , the court held that:

Accepted Answer

The court in Speelman v. Pascal held that assignments of rights to sums expected to become due are enforceable, even if the sums are not presently due.

Question 8

Discuss defenses available to the promisor in an action by an intended third-party beneficiary to enforce the promise.

Accepted Answer

The answer of Discuss defenses available to the promisor in...

Question 9

Barbara owes Arthur $2,000. On July 1, Arthur assigns the right to the $2,000 to Caleb. Thereafter, on July 15, Arthur assigns the same right to David, who in good faith gives value for it and knows nothing about the first assignee. In this case:

Accepted Answer

The rule regarding assignment of rights can differ by state, with some states following the "first in time, first in right" rule, while others may follow the "first to notify the debtor" rule.

Question 10

The court in Public Service Commission of Maryland v. Panda-Brandywine, L.P.:

Accepted Answer

The answer of The court in Public Service Commission of...

Question 11

Darrell owns a parcel of land that is encumbered by a mortgage held by the First National Bank. Darrell agrees to sell the land to Paul for $50,000. Darrell and Paul together go to the First National Bank to discuss the sale and purchase with the banker. Darrell, Paul, and the banker sign an agreement stating that Paul will assume the mortgage and that Darrell will be discharged from all further liability on the mortgage. In this case:

Accepted Answer

The agreement among the three parties constitutes a novation, which is a new contract that replaces the original one, releasing Darrell from liability and making Paul responsible for the mortgage.

Question 12

All but which of the following is true about a delegation of duties?

Accepted Answer

Assignments are generally examined more closely than delegations because they involve the transfer of rights, which can affect the obligee's interests more directly.

Question 13

Harold hired Blake Painters to paint his house. Blake decides he has too many jobs and delegates the duties to the Andrews Company. If Andrews does a poor job, and drips paint on Harold's flowers and windows, Harold:

Accepted Answer

Harold can sue both Blake and Andrews because Blake is responsible for the contract with Harold, and Andrews, as the subcontractor, is responsible for the poor performance.

Question 14

Carl, a contractor, and Lyle, a landowner, have a contract whereby Carl is to perform routine construction services according to the blueprints that Lyle has provided. Carl assigns the contract to David, a developer. As a result of this assignment:

Accepted Answer

Carl can assign his rights to David, but he remains liable for the performance of the duties unless Lyle agrees to release him from the contract.

Question 15

Which one of the following assignments would probably be prohibited by a court?

Accepted Answer

Mary's assignment of her paycheck is an assignment of future earnings, which is generally prohibited by law.

Question 16

Barbara owes Arthur $2,000. On July 1, Arthur assigns the debt to Caleb. Thereafter on July 15, Arthur assigns the same right to David, who in good faith gives value for it and knows nothing about the first assignee. David immediately notifies Barbara of the assignment. In this case:

Accepted Answer

The answer of Barbara owes Arthur $2,000. On July 1,...

Question 17

Kellie owes a duty to Grant and Kellie delegates the duty to Hank. Hank:

Accepted Answer

Hank is not obligated to perform the duty unless he agrees to do so, as delegation does not automatically impose a duty on the delegatee without their consent.

Question 18

The privilege to play tennis and socialize at the Capital City Country Club (CCCC) is obtained through application, references, resumes, and fees. Steven and Chanel want to assign the remaining 4 years of their 5-year membership to Charles and Prissy so that Steven and Chanel may join the posh Silver Hawk Tennis and Polo Club. CCCC sues to enjoin Steven and Chanel from assigning their membership. CCCC will most probably:

Accepted Answer

The parties intended the contract to be personal and non-assignable.

Question 19

List the implied warranties imposed by law on an assignor who has received value for the assignment.

Accepted Answer

The answer of List the implied warranties imposed by law...

Question 20

Which of the following involves an invalid assignment that a court would not enforce?

Accepted Answer

Automobile liability insurance policies typically contain clauses that prohibit assignment without the insurer's consent, making such assignments invalid without approval.

Quiz 16: Third Parties to Contracts