Question 1

A contracting party who, unknown to the other party, is represented by an agent, is called

Accepted Answer

An undisclosed principal is a contracting party who, unknown to the other party, is represented by an agent.

Question 2

Which of the following is true?

Accepted Answer

A trustee is the legal owner of the property that he is administering, holding it for the benefit of the beneficiaries.

Question 3

A receiving order is used in

Accepted Answer

A receiving order is used in bankruptcy proceedings to initiate the process of a debtor being declared bankrupt and their assets being gathered and distributed to creditors. Choices B, C, D, and E do not involve receiving orders.

Question 4

A novation occurs

Accepted Answer

A novation occurs when two parties agree to terminate a contract and substitute a new contract. This can occur when there is a change in circumstances that requires a different agreement, or when one of the parties wishes to be released from their obligations under the original contract. The novation process involves the agreement of all parties involved and can result in the creation of a completely new contract.

Question 5

A person or entity that administers a trust is called

Accepted Answer

A person or entity that administers a trust is called a trustee.

Question 6

A person who, although not the legal owner, may compel the trustee to provide benefits of a trust to him is called the

Accepted Answer

The beneficiary owner is a person who is not the legal owner of the trust, but has the right to compel the trustee to provide the benefits to them. The secondary beneficiary is a person who may receive benefits if the primary beneficiary is unable to receive them, but does not have the same right to compel the trustee as the beneficial owner. The trustee is the person responsible for managing the trust. Trust benefactor is not a commonly used term in trust law.

Question 7

Mary wants to be able to take care of her sons when she is away. She decides to give an amount of money to a friend, Melanie, with the instructions that she is to use that money to care for the children when she is away. Melanie is called a _ and the children are called _ .

Accepted Answer

Melanie is a trustee, as she has been entrusted with the responsibility of caring for the children with Mary's money. The children are beneficiaries, as they are the ones who will benefit from Melanie's care using Mary's money. Choice A is incorrect because "caretaker" is too general and does not necessarily imply that Melanie has been given specific instructions and money for the children's care. Choice B is incorrect because "guardian" suggests a more permanent and legal responsibility, rather than someone who is temporarily caring for the children while Mary is away. Choice C is incorrect because "money caretaker" is not a commonly used term and can be confusing. Choice E is incorrect because a constructive trust is a legal concept that does not apply here.

Question 8

Which of the following is true?

Accepted Answer

A novation occurs when the parties to a contract agree to terminate it and substitute a new contract, where one party leaves a contract and his or her place is taken by another person, and where parties to a contract change the subject matter of a contract.

Question 9

Which of the following is not an example of an exception to the privity of contract rule?

Accepted Answer

Bilateral contracts are not an exception to the privity of contract rule. Privity of contract means that only parties who enter into a contract can be held liable for its terms and conditions. In most cases, third parties are not bound by the contract nor can they enforce the rights and obligations contained in it. However, there are exceptions to this rule, including the undisclosed principal in an agency, a life insurance policy, collateral contracts, and the trust.

Question 10

Novation occurs when

Accepted Answer

Novation involves replacing an existing contract with a new one, with the consent of all parties involved, effectively substituting the original contract with a new agreement.

Question 11

Vicarious performance is where

Accepted Answer

Vicarious performance refers to a situation where a third party performs an obligation in place of another person who is ultimately liable for proper performance. This means that although the task is carried out by a third party, it is still the responsibility of the original party to ensure proper performance. Choices A, B, C, and E do not accurately describe vicarious performance.

Question 12

The right to intangible property is known as

Accepted Answer

The term "chose in action" refers to the right to intangible property or property that can only be claimed through legal action, such as patents, trademarks, or copyrights. This choice best fits the given definition.

Question 13

Privity of contract is

Accepted Answer

Privity of contract refers to the relationship that exists between parties to a contract. It is the direct relationship between the contracting parties, which gives them the right to enforce the terms of the contract against each other. This relationship does not extend to third parties who are not parties to the contract.

Question 14

The effect of the doctrine of privity of contract is that

Accepted Answer

The doctrine of privity of contract means that only the parties to a contract can enforce it or be held liable for its performance. This means that a person who is not a party to a contract cannot obtain benefits or rights under it, hence the best choice is D.

Question 15

Mary wants to be able to take care of her sons when she is away. She decides to give an amount of money to a friend, Melanie, with the instructions that she is to use that money to care for the children when she is away. The money given to Melanie is called and Melanie is a .

Accepted Answer

The term "trust" refers to the funds or assets that are given to someone (the trustee) to manage and use for a specific purpose, usually for the benefit of another person (the beneficiary). In this scenario, Mary is giving money to Melanie with specific instructions to use it for taking care of her sons, which fits the definition of a trust. Therefore, the correct answer is B. The other options either use incorrect terminology or do not accurately describe the situation.

Question 16

An implied contract that binds a party who made a representation or promise that induced a person to enter into a contract with another party is called,

Accepted Answer

A collateral contract is an implied contract that binds a party who made a representation or promise that induced a person to enter into a contract with another party. This representation or promise is not a part of the main contract but it encourages one of the parties to enter into the main contract.

Question 17

Mary sets up a trust fund for her children. The money is placed into an account with Kids Money an organization that looks after money belonging to children. Which of the following is true?

Accepted Answer

The answer of Mary sets up a trust fund for...

Question 18

A negotiable instrument is

Accepted Answer

A negotiable instrument is a written contract containing a promise, express or implied, to pay a specific sum of money to the order of a designated person or to bearer. It is a document that can be transferred from one person to another by delivery or endorsement, and the transferee acquires all the rights and remedies of the transferor. Examples of negotiable instruments include checks, promissory notes, and bills of exchange.

Question 19

The right to tangible property that can be possessed is known as

Accepted Answer

The right to tangible property that can be possessed is known as "chose in possession," which is the right to possess and enjoy the property. This is different from "chose in action," which refers to intangible property rights that cannot be physically possessed, such as patents or copyrights. Equitable assignment and assignment of rights refer to the transfer of property rights from one party to another, while chattel property rights refer to ownership of personal property or assets.

Question 20

Vicarious performance is not allowed when

Accepted Answer

When personal performance is required under the contract, vicarious performance is not allowed. This means that the party who is supposed to perform the contract must personally carry out their obligations, instead of delegating the task to a third party. All the other options listed in the question are situations where vicarious performance may or may not be allowed, depending on the specific circumstances.

Quiz 12: Privity of Contract and the Assignment of Contractual Rights

A contracting party who, unknown to the other party, is represented by an agent, is called

Which of the following is true?

A receiving order is used in

A novation occurs

A person or entity that administers a trust is called

A person who, although not the legal owner, may compel the trustee to provide benefits of a trust to him is called the

Mary wants to be able to take care of her sons when she is away. She decides to give an amount of money to a friend, Melanie, with the instructions that she is to use that money to care for the children when she is away. Melanie is called a _ and the children are called _ .

Which of the following is true?

Which of the following is not an example of an exception to the privity of contract rule?

Novation occurs when

Vicarious performance is where

The right to intangible property is known as

Privity of contract is

The effect of the doctrine of privity of contract is that

Mary wants to be able to take care of her sons when she is away. She decides to give an amount of money to a friend, Melanie, with the instructions that she is to use that money to care for the children when she is away. The money given to Melanie is called and Melanie is a .

An implied contract that binds a party who made a representation or promise that induced a person to enter into a contract with another party is called,

Mary sets up a trust fund for her children. The money is placed into an account with Kids Money an organization that looks after money belonging to children. Which of the following is true?

A negotiable instrument is

The right to tangible property that can be possessed is known as

Vicarious performance is not allowed when