Question 1

Chris was indebted to Kirk for a loan of $1,000. Kirk assigned Chris' promise to pay to Bryce. Payment by Chris to Kirk of the $1,000 before notice in writing of the assignment was given to Chris would require Bryce to recover the payment from Kirk, as he could not sue Chris for the money.

Accepted Answer

Once the promise to pay is assigned, the assignee (Bryce) becomes the rightful owner of the debt and has the right to collect payment directly from the debtor (Chris). However, if Chris already paid Kirk before receiving notice of the assignment, Bryce would need to obtain the payment from Kirk instead. This is because Chris is discharged from the debt by making payment to the assignor (Kirk) before receiving notice of the assignment.

Question 2

Pulpco contracts for logs from A1 Timber Co., who later made a statutory assignment of its rights and obligations to Forest Green Co. (FGC). The quality of FGC logs was less than the fine product usually delivered by A1 Timber, and for which they were known, and Pulpco brought suit against A1 Timber on the grounds that the contract was not assignable. The court would find that the contract was assignable.

Accepted Answer

Generally, contracts are assignable unless prohibited by specific language in the contract or by law. Since the question does not mention any such prohibition, it can be assumed that the contract was assignable and that A1 Timber's assignment to FGC was valid. Therefore, Pulpco's lawsuit against A1 Timber would not be successful.

Question 3

York Co. assigns a conditional contract with Bevier to Zeno Finance on November 10^th. Zeno Finance notifies Bevier of the assignment on November 17^th. Bevier had mailed his cheque to York Co., due on November 15^th, on November 12^th. If Zeno Finance gave Bevier notice on November 13^th that the November 15^th payment was to be made to them, but Bevier had already mailed the cheque on the 12^th to York Co., then Bevier must put a stop payment on the cheque to York Co. and send a new one to Zeno Finance for the November 15^th payment.

Accepted Answer

The answer of York Co. assigns a conditional contract with...

Question 4

York Co. assigns a conditional contract with Bevier to Zeno Finance on November 10^th. Zeno Finance notifies Bevier of the assignment on November 17^th. Bevier had mailed his cheque to York Co., due on November 15^th, on November 12^th. Bevier must put a stop payment on the cheque to York Co. and issue a new one to Zeno Finance for the November 15^th payment.

Accepted Answer

Bevier's obligation to York Co. was discharged when he mailed the cheque on November 12th, before Zeno Finance notified him of the assignment on November 17th.

Question 5

A student from another class says that assignments were originally common law concepts but are now a statutory process. You disagree with him.

Accepted Answer

The answer of A student from another class says that...

Question 6

The Four Guys Garage advertised automobile repairs by "Licensed Mechanics." Terry, a car owner, took his automobile to the Four Guys Garage for repairs. The garage owner, Todd, examined the car, and indicated that extensive repairs were required. Terry left his car with Todd, and the repairs were carried out by another licensed mechanic, Rod, an employee. Terry paid $150 for the repairs, but on his way home discovered that the repairs had been negligently made, and had ruined the engine. Terry may only sue Rod, the mechanic that negligently performed the service.

Accepted Answer

Terry may also be able to sue the Four Guys Garage and its owner, Todd, under the principle of vicarious liability. As the garage advertised itself as employing licensed mechanics, Todd can be held responsible for Rod's negligence in carrying out the repairs.

Question 7

Chris was indebted to Kirk for a loan of $1,000. Kirk assigned Chris' promise to pay to Bryce. If Bryce fails to give Chris notice of the assignment, Chris may lawfully make payment to Kirk.

Accepted Answer

If Bryce fails to give Chris notice of the assignment, Chris may lawfully make payment to Kirk according to the rule of "novation by rescission" which allows the debtor to discharge the original obligation by making payment to the original creditor. However, this rule only applies if the debtor has no notice of the assignment. Therefore, if Bryce fails to give Chris notice of the assignment, Chris may still lawfully make payment to Kirk.

Question 8

Dev contracts to build a computerized printing press for Tyrone. He subcontracts some of the work on the computerized components to another company, Charlie Co., which wired a vital component negligently. The repairs are very costly for Tyrone. He can sue Dev for the losses caused by Charlie Co.

Accepted Answer

Dev is responsible for the work of their subcontractors and can be held liable for any damages caused by their negligence.

Question 9

Chris was indebted to Kirk for a loan of $1,000. Kirk assigned Chris' promise to pay to Bryce. The assignment by Kirk to Bryce must be in writing to be an effective assignment.

Accepted Answer

The assignment of an obligation or debt must be in writing to be effective under the Statute of Frauds.

Question 10

Chris was indebted to Kirk for a loan of $1,000. Kirk assigned Chris' promise to pay to Bryce. Notice in writing of the assignment must be given to Chris before Chris is obliged to pay Bryce.

Accepted Answer

This is in accordance with the rule of notice of assignment, which requires the debtor to be notified of the assignment before he or she is bound to pay the assignee.

Question 11

Mr. Richards instructed the contractor who was building his new house to face it with a special synthetic marble made by Messier Ltd. Messier had promised Mr. Richards in writing that the synthetic marble would last longer than the Parthenon and be in better shape. Within three months of its installation, which was properly done, the "marble" was cracking, discolouring, and crumbling at the seams. Mr. Richards can sue Messier successfully although it was not he but the contractor who made the purchase from Messier.

Accepted Answer

Mr. Richards can sue Messier successfully as he had a written promise from Messier that the synthetic marble would last longer than the Parthenon and be in better shape, which did not turn out to be true. The fact that the contractor made the purchase does not absolve Messier of their responsibility to provide a product that meets the promised specifications.

Question 12

If Alan is a beneficiary of his father's life insurance with Avuncular Life, he has the statutory right to enforce payment if his father dies and Avuncular refuses to pay on the grounds that Alan lacks privity of contract with it.

Accepted Answer

As a beneficiary, Alan has a right to enforce payment under the life insurance policy even though he does not have a contractual relationship with Avuncular Life. This statutory right is recognized in most jurisdictions.

Question 13

If the restrictive covenant said that the land was never to be sold to a woman of Scottish descent, Martin could ignore it and sell to whomever he pleased, on the grounds that the clause breached public policy.

Accepted Answer

The clause in the restrictive covenant is discriminatory and violates public policy. Therefore, Martin can ignore it and sell to anyone he chooses.

Question 14

Chris was indebted to Kirk for a loan of $1,000. Kirk assigned Chris' promise to pay to Bryce. The assignment must be of the entire agreement between Chris and Kirk.

Accepted Answer

Assignments must generally be of the entire agreement, unless there is a provision in the agreement for partial assignment.

Question 15

Gerry and Juanita agree that Tracey must pay each of them $10 per month. They sign a contract and show it to Tracey, who makes no objection to it. Either Gerry or Juanita may enforce the contract against Tracey if she fails to pay.

Accepted Answer

For a contract to be enforceable, there must be an agreement (offer and acceptance), consideration, and intention to create legal relations between the parties involved. Tracey's lack of objection does not constitute acceptance of the contract terms, thus she is not bound by the contract.

Question 16

Kevin was injured when a bottle of pop, purchased by Katie and given to him, exploded in his hand. Kevin cannot sue the manufacturer and receive damages for his injuries because he lacks privity of contract.

Accepted Answer

Privity of contract is not required for a person to sue a manufacturer for damages due to a defective product, as product liability laws allow individuals injured by defective products to seek compensation regardless of whether they were the purchaser.

Question 17

The Four Guys Garage advertised automobile repairs by "Licensed Mechanics." Terry, a car owner, took his automobile to the Four Guys Garage for repairs. The garage owner, Todd, examined the car, and indicated that extensive repairs were required. Terry left his car with Todd, and the repairs were carried out by another licensed mechanic, Rod, an employee. Terry paid $150 for the repairs, but on his way home discovered that the repairs had been negligently made, and had ruined the engine. The Four Guys Garage is liable to Terry under the vicarious performance rule for Rod's negligence.

Accepted Answer

The Four Guys Garage can be held vicariously liable for the negligence of its employee, Rod, under the principle of vicarious liability. As Rod was a licensed mechanic and an employee of the garage, it is reasonable for Terry to expect that he was competent and capable of making the required repairs to a reasonable standard. Since Rod's negligence caused damage to Terry's car, the garage can be held responsible for the damages caused.

Question 18

The Four Guys Garage advertised automobile repairs by "Licensed Mechanics." Terry, a car owner, took his automobile to the Four Guys Garage for repairs. The garage owner, Todd, examined the car, and indicated that extensive repairs were required. Terry left his car with Todd, and the repairs were carried out by another licensed mechanic, Rod, an employee. Terry paid $150 for the repairs, but on his way home discovered that the repairs had been negligently made, and had ruined the engine. Money damages awarded by the court for the negligence would be approximately equal to Terry's loss

Accepted Answer

The garage advertised that they had licensed mechanics, and Terry relied on that advertisement when he brought his car in for repairs. The fact that the repairs were negligently made and resulted in damages to Terry's car suggests that Todd and Rod breached their duty of care to Terry. As a result, Terry would likely be entitled to recover the amount of his damages, which would be approximately equal to his loss.

Question 19

Ace Engineering needed cash and assigned a block of its accounts receivable to Wellington Finance Company. A week later, it assigned another block to Bagot Finance Company. By an oversight, the second block contained an account, a receivable from Smith, which Ace had already assigned to Wellington. The notice of assignment from Bagot arrived at the Smith offices before that of Wellington. Smith should pay against the demand of Bagot Finance Co.

Accepted Answer

Under the rule of 'first in time, first in right', the notice of assignment from Bagot Finance Company arrived first at Smith's office. Therefore, Smith should pay against the demand of Bagot Finance Co.

Question 20

If Martin bought a property from Nevin, knowing (because it was noted on the title deeds) that Nevin had agreed to a restrictive covenant in his contract to purchase the property from Olan, Martin must conform to the restrictive covenant even if it is not included in his contract with Nevin.

Accepted Answer

Martin is bound by the restrictive covenant because it is noted on the title deeds and therefore affects the property, regardless of whether it was included in his contract with Nevin.

Quiz 12: Performance of Contractual Obligations