Deck 14: Third-Party Rights

Question 1

An obligee is one who has the right to receive a contract benefit.

Answer 1

True

Question 2

Members of the public are intended beneficiaries of contracts made by the government with a contractor to do public works.

Answer 2

False

Question 3

The obligor must be informed of an assignment for it to be valid.

Answer 3

False

Question 4

The beneficiary's rights may be altered as long as they have not vested.

Question 5

A donee beneficiary has no rights.

Question 6

A delegation is the transfer to a third party of the duty to perform under a contract.

Question 7

The beneficiary's rights are always limited by the terms of the contract.

Question 8

A creditor beneficiary cannot sue to enforce the terms of a contract because he is not a party to the contract.

Question 9

A right that will arise from a future contract cannot be the subject of a present assignment.

Question 10

Contract rights are always assignable.

Question 11

A gratuitous assignment is always revocable.

Question 12

When the promisee is not indebted to the third person but intends for him or her to have the benefit of the promisor's performance, the third person is a creditor beneficiary.

Question 13

Most duties in a contract are almost never expressly delegated.

Question 14

Problems of acceptance of an assignment normally arise only when the assignor intends the assignment as a gift.

Question 15

Personal services are delegable.

Question 16

Mrs. Knittle quits her business, Knittle's Knitting Shop; she assigns the lease and her insurance policy to Parker's Pistol Packing, a company that packs shotgun shells with gunpowder. The assignment of the insurance policy is ineffective.

Question 17

The delegation of a duty leaves the delegator still liable.

Question 18

To effect an assignment, the assignor must make known his intention to transfer the rights to the third person.

Question 19

A novation ordinarily arises when a new obligor agrees to pay or do that which was agreed to by the original party to the contract.

Question 20

Under the Uniform Commercial Code, any assignments of rights in excess of $1,000 must be in writing.

Question 21

A creditor beneficiary is _____.

A) one to whom the promisor agrees to pay a debt of the promisee
B) one who has no rights
C) an intended beneficiary
D) the recipient of a gift promise
E) one who is not the intended beneficiary

Question 22

The "shoe rule" does not apply when _____

A) there is a sale of a negotiable instrument to a holder in due course.
B) doing so would maintain the obligation of the obligor.
C) statute or public policy forbids the assignment.
D) the contract itself precludes assignment.
E) the assignor must make known his intention to transfer the rights to the third person.

Question 23

A personal right can be defined as:

A) surrender by a party of legal rights otherwise available to him or her.
B) the relationship of the immediate parties to a contract.
C) the duty of a particular person to perform or receive contract duties or benefits
D) a new contract substituting for an old one, or a new party to a contract replacing a former party.
E) a contract for household or domestic purposes, not commercial purposes.

Question 24

One to whom an obligation is owed is a(n) _____

A) donee beneficiary.
B) intended beneficiary.
C) obligor
D) obligee
E) delegator

Question 25

An assignment might be invalidated by a court if the assignment materially changes the obligor's duties.

Question 26

Which of the following must hold for an assignment to become effective?

A) The assignor must promise to make the assignment some time in future.
B) The assignee must manifest his acceptance under most circumstances.
C) The contract itself must preclude assignment.
D) The assignor must purchase the right to receive income from another.
E) The obligor must become the delegatee of the assignment.

Question 27

If the obligor cares who the person of the obligee is, the contract creating the obligation cannot be assigned.

Question 28

Persons are said to lack privity when:

A) the right or duty of a particular person to perform or receive contract duties or benefits cannot be assigned.
B) they cannot pay money to receive another's executory contractual benefits.
C) an assignee cannot take greater rights than his assignor had.
D) they are not party to a contact which they were intended to benefit from
E) they are not party to a contract and cannot enforce its terms.

Question 29

Alice "assigns to Baker" all Alice's rights in a contract to deliver bagels. Baker becomes a delegatee of Alice's duties.

Question 30

Under which of the following cases are assignments NOT allowed?

A) Change in duties of the obligor
B) Assignment of personal rights
C) Assignment accepted by statute or public policy
D) Contracts that assign rights
E) Contracts based on assignee's performance

Question 31

Which of the following will occur if a statute or public policy forbids an assignment?

A) The obligation of the obligor changes.
B) The obligee will become the assignor.
C) The assignor will not assign any right.
D) The contract will preclude the assignment.
E) The obligor is burdened by the obligation.

Question 32

Naomi sells her car to Jack, who assumes her mortgage. Naomi, in other words, has delegated the duty to pay the bank to Jack. This contract is called:

A) a consumer transaction.
B) a privity.
C) vesting of rights.
D) a novation.
E) an assignor's warranties

Question 33

An incidental beneficiary is:

A) the intended beneficiary.
B) the donee beneficiary.
C) one who has no rights.
D) the creditor beneficiary
E) one who promises to pay the debt.

Question 34

The surrender by a party of legal rights otherwise available to him or her is:

A) a delegator's duty.
B) a personal right.
C) privity.
D) waiver of defenses.
E) vesting of rights.

Question 35

A contract term barring the contract's assignment usually prohibits both an assignment of the contract's rights but also a delegation of its duties.

Question 36

Buyer bought a backhoe from Seller under a contract in which "Buyer waives all rights as against any assignee." Seller assigned the contract to Thirdparty, who knew that the backhoe had a concealed defect. When Buyer discovers the defect Buyer must still pay Thirdparty, and then seek recourse against Seller.

Question 37

What is vesting of rights?

A) Surrender by a party of legal rights otherwise available to him or her
B) The time at which the benefit of a contract is fixed in the beneficiary
C) An assignee taking equal rights as his assignor
D) The right or duty of a particular person to perform or receive contract duties or benefits
E) A new contract substituting for an old one, or a new party to a contract replacing a former party

Question 38

What is an assignor's warranty?

A) The right or duty of a particular person to perform or receive contract duties or benefits; cannot be assigned
B) A new contract substituting for an old one, or a new party to a contract replacing a former party
C) The relationship of the immediate parties to a contract, a "private" relationship, as between a retailer and a customer
D) The passing or delivering by one person to another of the duty to perform a contract
E) Promises, express or implied, made by an assignor to the assignee about the merits of the assignment

Question 39

A factor is a person:

A) not a party to a contract who is intended, as a gift, to benefit from its performance.
B) to whom an obligation is owed.
C) not a party to a contact who was intended to benefit from it and who may sue to enforce its terms.
D) not a party to a contract who benefits from its performance but was not intended to specifically.
E) who purchases the right to receive income from another.

Question 40

Who is a delegatee?

A) An obligator who delegates a duty
B) The one who performs under a contract
C) The one who is witness to the assignment The one to whom the delegation is made
D) The one to whom the contract is transferred

Question 41

What is a waiver of defenses?

Question 42

Ian, a carpenter, repaired Sally's deck and sent her a bill for $500, accompanied with a note: "Sally, instead of paying me, pay the $500 to the Humane Society as a donation from me." If the Humane Society doesn't get paid, it may sue:

A) Ian
B) Sally
C) Ian or Sally
D) The Humane Society cannot sue either Ian or Sally

Question 43

Who is an intended beneficiary?