Question 1

The City of Monroe enters into an oral contract with Allied Construction Co.to pave a gravel road.The gravel road passes in front of John's home.Once the road is paved,John's home would increase significantly in value.Allied fails to pave the gravel road.If John sued Allied for breach of contract,then which of the following is true?

Accepted Answer

John is only an incidental third-party beneficiary, meaning he is not a party to the contract and does not have privity with Allied. Therefore, he cannot sue for breach of contract. In addition, the Statute of Frauds does not apply here since the contract was an oral one.

Question 2

Luziva Co.enters into a contract to deliver 200 coats to Buyer.Luziva determines that it cannot honor the contract,so it assigns the contract to Maniva Co.Maniva Co.delivers the specified 200 coats to Buyer per the contract.Which of the following is true?

Accepted Answer

When Luziva Co. assigned the contract to Maniva Co., Maniva Co. became responsible for delivering the specified 200 coats to Buyer per the contract. Buyer is obligated to accept the coats and pay Maniva Co. since Maniva Co. is fulfilling the terms of the contract as the assignee. Therefore, Option A and Option C are both incorrect because Buyer cannot refuse to accept the coats and Luziva Co. is not responsible for delivering the coats anymore since it assigned the contract to Maniva Co.

Question 3

Which of the following events would probably excuse performance of a contract because of commercial impracticability?

Accepted Answer

The unforeseeable trade embargo causing commodity prices to triple would likely make performance under the contract commercially impractical.

Question 4

Ralph Co.enters into an agreement to sell 500 computers to Buyer.Ralph decides that it cannot fulfill its contract so it transfers all its rights and duties under the contract to George Co.Which of the following is true?

Accepted Answer

This is both an assignment and a delegation. Ralph Co. is assigning its rights and delegating its duties to George Co. If George Co. accepts and performs the duties, then the contract is still enforceable.

Question 5

Roger contracted with Lori to produce a sculpture of her.The sculpture was to be made to Lori's satisfaction.Upon completion of the sculpture,which of the following is true?

Accepted Answer

The contract states that the sculpture must be produced to Lori's satisfaction. Therefore, if Lori really does not like the sculpture, she may refuse to accept it. The contract does not mention anything about a reasonable person's standard or affordability.

Question 6

Ralph Co.contracts to sell 500 televisions to Buyer.Ralph decides that it cannot fulfill its contract,so it transfers all its rights and duties to George Co.If George Co.fails to deliver the televisions as scheduled,then which of the following is true?

Accepted Answer

The answer of Ralph Co.contracts to sell 500 televisions to...

Question 7

Husband buys an insurance policy with a face value of $100,000 and names his wife as sole beneficiary.When husband dies,the insurance company refuses to pay her the $100,000.Which of the following best describes this situation?

Accepted Answer

The wife is a third-party beneficiary to the insurance contract because she was named the sole beneficiary by the husband. As such, she has the right to sue the insurance company if they refuse to pay out the face value of the policy.

Question 8

The bank lends money to Jane to buy a car.After several months,Jane sells the car to Dan.Dan agrees to pay off the loan to the Bank.If Dan fails to pay the loan,then which of the following is true?

Accepted Answer

The bank has a right to recover the amount due on the loan from either Dan or Jane because both of them are liable for the debt.

Question 9

Roger wants to buy a new car,so he borrows money from the bank.Several months later,he sells his car to Lisa,who agrees to pay the bank loan.Which of the following is true?

Accepted Answer

The bank is an intended third-party beneficiary because the loan agreement between Roger and the bank was made with the intention that a third party, such as Lisa, would ultimately pay off the loan. Lisa's agreement to pay off the loan is fulfilling the bank's expectation as an intended beneficiary.

Question 10

Amy agrees to build a barn for Sally.The contract provides that Sally must be "personally satisfied with the barn." If the barn is completed in a workmanlike manner,which of the following tests would be used to test Sally's satisfaction?

Accepted Answer

The answer of Amy agrees to build a barn for...

Question 11

Which of the following is true?

Accepted Answer

Impossibility of performance can relieve a party from the obligation to perform under a contract. If it has become illegal to perform a contract, it can be considered impossible to perform and therefore discharge the duty to perform. The other options are not accurate statements of the law.

Question 12

Pete leases an apartment.The written lease agreement states that the lease is not assignable without consent of the landlord.Pete assigns his lease to his sister Paula,without the landlord's consent.In most states,which of the following is true?

Accepted Answer

In most states, non-assignability clauses are enforceable and assignments without the landlord's consent are invalid until the landlord consents. However, the landlord must act reasonably in deciding whether or not to grant consent. Therefore, option A is the correct choice. Option B is incorrect because Paula does not automatically succeed to Pete's rights without the landlord's consent. Option C is incorrect because Pete is still liable on the lease unless the landlord consents to the assignment. Option D is incorrect because non-assignability clauses are generally enforceable.

Question 13

A force majeure clause:

Accepted Answer

A force majeure clause is a provision in a contract that excuses performance by one or both parties in the event of unforeseeable circumstances that are beyond their control and could not have been reasonably anticipated. These circumstances typically include natural disasters, war, terrorism, or other events that make performance of the contract impracticable or impossible. This clause does not address assignment of contract rights, create a third-party beneficiary, require personal satisfaction of the promisee, or operate as a delegation of duties.

Question 14

Assume that the players on the Colorado Rockies baseball team breach their contract by refusing to play the remainder of their games in the season.A restaurant located near Coors Field,where the games would have been played,sues the players.As a result,which of the following is true?

Accepted Answer

The restaurant is not an intended beneficiary of the players' contract with the team, so it cannot claim damages for breach of that contract.

Question 15

Tenant has a lease on an apartment through December of the current year.Tenant and Newtenant go to Landlord to have Newtenant take over the lease through the end of December.Landlord agrees and releases Tenant from any responsibility under the lease.This is a(n):

Accepted Answer

Novation is the substitution of a new contract for an existing one, thereby releasing the original party from any further obligations. The scenario in the question describes a situation where Newtenant is taking over the lease from Tenant, and the landlord is releasing Tenant from any responsibility under the original lease. This is an example of novation. Choice A, substituted contract, is not accurate as there is no substitution of a new contract. Choice B, accord and satisfaction, is also not the best choice as this concept typically applies to debts, not leases. Choice D, mutual rescission, is not accurate as there is no indication that the original lease is being terminated.

Question 16

Rebecca owes Ian $5,000.Ian needs money in a hurry so he assigns his right to collect from Rebecca to Janet for $4,500.Several days later,Ian assigns his right to collect from Rebecca to Kristin for another $4,500.Ian then leaves town.Kristin is the first to notify Rebecca of the assignment.In the majority of states,which of the following best describes this situation?

Accepted Answer

The answer of Rebecca owes Ian $5,000.Ian needs money in...

Question 17

Homeowner enters into an agreement with Grasscutter to cut the grass at Homeowner's house.The contract says nothing about delegation or assignment.Grasscutter gets a friend,Lawnmower to do the actual work.Which is true?

Accepted Answer

Unless the contract explicitly prohibits delegation, a party can delegate their duties to a third party. Grasscutter can have Lawnmower perform the work, but Grasscutter remains responsible for ensuring that the work is done properly, and if Lawnmower fails to do the work properly, Grasscutter can be held liable for any resulting harm to the homeowner. Therefore, option D is the correct answer.

Question 18

Paragon Studios hires Harry Ford to play Indiana Bones in one of its new movies.Harry decides that he cannot fulfill this contract so he assigns his rights and delegates his duties under the contract to Tom Smellnik,another famous actor and friend of Harry.Which of the following best describes this situation?

Accepted Answer

Harry Ford cannot delegate his duties under the contract because personal service contracts, especially those involving unique skills or talents, typically cannot be delegated without the consent of the other party (Paragon Studios).

Question 19

Which of the following is true?

Accepted Answer

An accord and satisfaction discharge the duties under the original contract only when it has been performed, whereas a substituted contract discharges duties under the original contract upon formation of the substituted contract. The other options are incorrect as they either involve a new party (A and B) or provide inaccurate information about the types of contracts (D).

Question 20

Under a mutual rescission,the parties to a contract:

Accepted Answer

Under a mutual rescission, the parties agree to undo and cancel a contract, effectively releasing each other from their obligations under that contract. No new terms are agreed upon, and no third party is involved. The purpose of a mutual rescission is to restore the parties to their pre-contract positions.

Quiz 15: Third-Party Rights and Discharge

Luziva Co.enters into a contract to deliver 200 coats to Buyer.Luziva determines that it cannot honor the contract,so it assigns the contract to Maniva Co.Maniva Co.delivers the specified 200 coats to Buyer per the contract.Which of the following is true?

Which of the following events would probably excuse performance of a contract because of commercial impracticability?

Ralph Co.enters into an agreement to sell 500 computers to Buyer.Ralph decides that it cannot fulfill its contract so it transfers all its rights and duties under the contract to George Co.Which of the following is true?

Roger contracted with Lori to produce a sculpture of her.The sculpture was to be made to Lori's satisfaction.Upon completion of the sculpture,which of the following is true?

Ralph Co.contracts to sell 500 televisions to Buyer.Ralph decides that it cannot fulfill its contract,so it transfers all its rights and duties to George Co.If George Co.fails to deliver the televisions as scheduled,then which of the following is true?

Husband buys an insurance policy with a face value of $100,000 and names his wife as sole beneficiary.When husband dies,the insurance company refuses to pay her the $100,000.Which of the following best describes this situation?

The bank lends money to Jane to buy a car.After several months,Jane sells the car to Dan.Dan agrees to pay off the loan to the Bank.If Dan fails to pay the loan,then which of the following is true?

Roger wants to buy a new car,so he borrows money from the bank.Several months later,he sells his car to Lisa,who agrees to pay the bank loan.Which of the following is true?

Amy agrees to build a barn for Sally.The contract provides that Sally must be "personally satisfied with the barn." If the barn is completed in a workmanlike manner,which of the following tests would be used to test Sally's satisfaction?

Which of the following is true?

Pete leases an apartment.The written lease agreement states that the lease is not assignable without consent of the landlord.Pete assigns his lease to his sister Paula,without the landlord's consent.In most states,which of the following is true?

A force majeure clause:

Assume that the players on the Colorado Rockies baseball team breach their contract by refusing to play the remainder of their games in the season.A restaurant located near Coors Field,where the games would have been played,sues the players.As a result,which of the following is true?

Tenant has a lease on an apartment through December of the current year.Tenant and Newtenant go to Landlord to have Newtenant take over the lease through the end of December.Landlord agrees and releases Tenant from any responsibility under the lease.This is a(n) :

Homeowner enters into an agreement with Grasscutter to cut the grass at Homeowner's house.The contract says nothing about delegation or assignment.Grasscutter gets a friend,Lawnmower to do the actual work.Which is true?

Which of the following is true?

Under a mutual rescission,the parties to a contract: