Question 1

A contract between Laser Equipment, Inc., and Medical Center contains a clause stating that any assignment is "void." This ordinarily prohibits​
A) any assignment.​
B) ​no assignment.
C) ​only an assignment of contract rights to personal services.
D) ​only an assignment that would change the obligor's risk.

Accepted Answer

The clause stating that any assignment is "void" prohibits any assignment of the contract rights, regardless of the type of assignment or the change in the obligor's risk.

Question 2

State University provides housing on campus and in some adjacent off-campus neighborhoods. To lease a university house or apartment, a person must be student at State. This requirement is​
A) ​an implied condition .
B) ​a concurrent condition.
C) ​a condition subsequent.
D) ​a condition precedent.

Accepted Answer

A condition precedent is a requirement that must be met before a party is obligated to perform under a contract. In this case, being a student at State University is a condition that must be met before a person can lease university housing.

Question 3

Fact Pattern 11-1 
Medical Accounts Collection enters into a contract to employ Natalie as a billing and credit manager for two years. During the first year, Natalie is often absent without explanation and when present fails to adequately do her job.
-Refer to Fact Pattern 11-1. Natalie's performance is most likely​
A) ​a material breach.
B) ​a minor breach.
C) ​a minimal breach.
D) ​no breach.

Accepted Answer

Natalie's behavior of often being absent without explanation and failing to do her job adequately constitutes a material breach of her employment contract. A material breach is one that is significant enough to excuse the non-breaching party from further performance under the contract.

Question 4

Eli owes Martin $10,000. Martin assigns the claim to Jack. Jack does not notify Eli of the assignment. A week later, Martin assigns the same claim to Allen. Allen immediately notifies Eli of the assignment. Allen​
A) ​has priority to payment in all states.
B) ​has priority to payment in states that follow the English rule.
C) ​does not have priority to payment in any state.
D) ​has priority to payment in most states.

Accepted Answer

Allen has priority to payment in states that follow the English rule because under the English rule, the first assignee to notify the debtor of the assignment has priority. Since Allen notified Eli first, he would have priority in those jurisdictions.

Question 5

Market Company and Nick enter into a contract for Nick to cut and trim the landscaping around Market's building before a meeting of the company's sales staff. When Nick's schedule conflicts, his transfer of the duties of cutting and trimming to Otis is​
A) ​a delegation.
B) ​an assignment.
C) ​a third party beneficiary contract.
D) ​prohibited.

Accepted Answer

Nick transferring his duties to Otis is an example of delegation, which is the transfer of one party's duties to another party. This can be done with the consent of the other party involved in the contract (in this case, Market Company). An assignment involves the transfer of rights under a contract, not duties. A third party beneficiary contract involves a third party who is not a party to the original contract but is intended to benefit from it. Prohibition would only occur if the contract explicitly states that delegation is not allowed.

Question 6

Marco and Ned enter into a contract for the sale of Marco's apartment for which Ned agrees to pay him $100,000. Marco cannot prohibit Ned from transferring his right to the ownership of the apartment because such a prohibition is​
A) ​against public policy.
B) ​immoral.
C) ​unconscionable.
D) ​a crime.

Accepted Answer

Prohibiting the transfer of property rights is against public policy because it restricts the freedom of contract and the ownership of property. It is important for the economy and for individuals to have the flexibility to transfer or sell their property rights as they see fit. Therefore, the prohibition is void and unenforceable.

Question 7

Paolho and Roth agree that Paolho will fix Roth's boat dock in exchange for $5,000. Paolho spends half of the amount due under the contract to acquire the materials for the job from Sav-U Economy Lumber. Sav-U is​
A) ​a delegatee.
B) ​an intended beneficiary.
C) ​an incidental beneficiary.
D) ​an assignor.

Accepted Answer

Sav-U Economy Lumber is an incidental beneficiary because Paolho's agreement with Roth did not intend to confer a benefit upon Sav-U. The purchase of materials from Sav-U was necessary for Paolho to complete his obligation to Roth under their contract. However, Sav-U did not have a direct contractual relationship with either Paolho or Roth.

Question 8

Gavin takes out an insurance policy on her car. Gavin can assign his policy to a third party​
A) ​under any circumstances.
B) ​under no circumstances.
C) ​as long as he does so in writing.
D) ​if a court approves the assignment.

Accepted Answer

The answer of Gavin takes out an insurance policy on...

Question 9

Real Apps, Inc., enters into a contract with SalesCorp to create an app for the firm. To fulfill the contract, Real Apps hires Tad and ten other student interns. With respect to the contract between Real Apps and SalesCorp, Tad is​
A) ​an intended beneficiary.
B) ​an incidental beneficiary.
C) ​a delegatee.
D) ​an assignee.

Accepted Answer

Tad, as a student intern hired by Real Apps to work on the app for SalesCorp, is considered an incidental beneficiary. This means Tad benefits from the contract indirectly, but the contract was not made for the purpose of benefiting him or the other interns directly.

Question 10

Ann offers to buy Beth's land only if an appraiser estimates that its current value is more than a certain price. Later, the appraiser deems the worth of the land to be less than Beth's price. Ann and Beth's obligations​
A) ​must still be performed.
B) ​must now be renegotiated.
C) ​are on "hold."
D) ​are discharged.

Accepted Answer

The obligations are discharged because the condition (the land being appraised for more than a certain price) was not met, thus nullifying the agreement.

Question 11

Ben and Ivy enter into a contract under which Ben agrees to cater Ivy's wedding in exchange for a cash down payment. The contract expressly prohibits any transfer of rights. A contract right may be transferred, however, if the transfer involves​
A) ​a right to receive payment.
B) ​a right to Ben's services.
C) ​rights under Ivy's insurance policy against Ben's failing to perform.
D) ​none of the choices.

Accepted Answer

A right to receive payment can be assigned without the consent of the other party to the contract. Therefore, Ben can assign his right to receive payment from Ivy to a third party. However, since the contract expressly prohibits any transfer of rights, this option may not be available in this particular scenario. Option B is incorrect because a personal service contract cannot be assigned without the consent of the other party. Option C is also incorrect because insurance policies are not contract rights and cannot be assigned. Option D is incorrect because there is at least one valid option.

Question 12

Dharma enters into a contract to manage the operations of Esther's dental office for one year, renewable for subsequent one-year terms. If this contract is discharged like most contracts, it will be​
A) ​canceled.
B) ​breached.
C) ​altered.
D) ​performed.

Accepted Answer

Since the contract is for Dharma to manage the operations of Esther's dental office, the natural expectation would be for Dharma to perform the duties and responsibilities under the contract. If both parties fulfill their obligations under the contract, it will be discharged by performance. Therefore, the best choice is D, performed.

Question 13

Lew's Landscaping Service substantially performs its contract with Metro Office Park. Metro's duty to perform​
A) ​remains absolute.
B) ​is discharged.
C) ​is excused.
D) ​is suspended.

Accepted Answer

Lew's Landscaping Service performing its contract with Metro Office Park does not discharge Metro's duty to perform. Metro still has an absolute duty to perform its obligations under the contract.

Question 14

Fact Pattern 11-1 
Medical Accounts Collection enters into a contract to employ Natalie as a billing and credit manager for two years. During the first year, Natalie is often absent without explanation and when present fails to adequately do her job.
-Refer to Fact Pattern 11-1. Natalie's performance most likely​
A) ​discharges Medical Accounts from the contract.
B) ​has no effect on Medical Accounts' performance.
C) ​undercuts Medical Accounts' duties under the contract.
D) ​suspends Medical Accounts' duty to perform.

Accepted Answer

Natalie's failure to adequately do her job and frequent absences without explanation can be considered a breach of contract by Medical Accounts Collection. If Natalie's breach is significant enough, Medical Accounts may be justified in terminating the contract and discharging Natalie from employment.

Question 15

Restoration, Inc., enters into a contract to refurbish a train depot for Dining, Inc., to open as Whistle Stop. If Restoration completes most of the work promised in the contract, its performance will be​
A) ​absolute.
B) ​complete.
C) ​material.
D) ​substantial.

Accepted Answer

Substantial performance refers to a situation in which a party has completed most of the work promised in a contract, but there may be minor defects or omissions. This would apply if Restoration completed most, but not necessarily all, of the work promised in the contract for refurbishing the train depot for Dining, Inc.

Question 16

Joy and Kris enter into a contract for Kris to lay sod in Joy's yard for which she agrees to pay Kris. When Kris's schedule conflicts, she contacts Leza, to whom Kris "assigns all rights under the contract." Kris is​
A) absolved of any liability under the contract.​
B) ​liable to Joy for breach of contract.
C) ​liable to Joy if Leza does not perform.
D) ​liable to Leza for inducing a prohibited contract.

Accepted Answer

Kris remains liable to Joy if Leza does not perform as per the doctrine of delegation, which means that the delegation of the duty to perform does not relieve the delegator (Kris) of responsibility for the duty. Therefore, if Leza fails to perform, Kris can still be held responsible for the breach of contract.

Question 17

Mai is a third party beneficiary under a contract between Novia and Opie. Novia and Opie can modify or rescind their contract without Mai's consent​
A) ​at any time.
B) ​at no time.
C) ​after Mai's rights have vested.
D) ​before Mai's rights have vested.

Accepted Answer

As a third party beneficiary, Mai's rights have not vested until she becomes a party to the contract. Therefore, Novia and Opie can modify or rescind the contract before Mai's rights have vested without her consent.

Question 18

Ian owes Jo $5,000. Jo assigns the right to this payment to Kyle. Notice by Jo to Ian of the assignment​
A) ​must be given immediately.
B) ​must be given within thirty days.
C) ​must be given within a reasonable time.
D) ​is not required.

Accepted Answer

In the context of assignment of rights, notice of the assignment to the debtor (in this case, Ian) is not legally required for the assignment to be effective. The assignment between Jo and Kyle is valid upon agreement, regardless of whether Ian is notified. However, notifying Ian would be practical to ensure that he makes payments to the correct party (Kyle) going forward.

Question 19

Ed's Electric substantially performs its contract with Forest Hills Apartments, Inc., to deliver and install an alarm system and parking lot lighting. Forest Hills is entitled to​
A) ​damages.
B) ​nothing more.
C) ​to be excused from performance.
D) ​suspend performance.

Accepted Answer

When a party substantially performs their contract, the other party is entitled to damages for the part of the contract that was not fully performed. This is to compensate for the slight deviation from the agreed terms.

Question 20

Laramie contracts to provide cattle-herding services to Miles for $1,400 per month. Laramie cannot transfer this duty​
A) ​under any circumstances.
B) ​without continuing to be potentially liable.
C) ​without Miles's consent.
D) ​without paying Miles at least one monthly fee.

Accepted Answer

The answer of Laramie contracts to provide cattle-herding services to...

Quiz 11: Third Party Rights and Discharge

A contract between Laser Equipment, Inc., and Medical Center contains a clause stating that any assignment is "void." This ordinarily prohibits​

State University provides housing on campus and in some adjacent off-campus neighborhoods. To lease a university house or apartment, a person must be student at State. This requirement is​

Eli owes Martin $10,000. Martin assigns the claim to Jack. Jack does not notify Eli of the assignment. A week later, Martin assigns the same claim to Allen. Allen immediately notifies Eli of the assignment. Allen​

Market Company and Nick enter into a contract for Nick to cut and trim the landscaping around Market's building before a meeting of the company's sales staff. When Nick's schedule conflicts, his transfer of the duties of cutting and trimming to Otis is​

Marco and Ned enter into a contract for the sale of Marco's apartment for which Ned agrees to pay him $100,000. Marco cannot prohibit Ned from transferring his right to the ownership of the apartment because such a prohibition is​

Paolho and Roth agree that Paolho will fix Roth's boat dock in exchange for $5,000. Paolho spends half of the amount due under the contract to acquire the materials for the job from Sav-U Economy Lumber. Sav-U is​

Gavin takes out an insurance policy on her car. Gavin can assign his policy to a third party​

Real Apps, Inc., enters into a contract with SalesCorp to create an app for the firm. To fulfill the contract, Real Apps hires Tad and ten other student interns. With respect to the contract between Real Apps and SalesCorp, Tad is​

Ann offers to buy Beth's land only if an appraiser estimates that its current value is more than a certain price. Later, the appraiser deems the worth of the land to be less than Beth's price. Ann and Beth's obligations​

Ben and Ivy enter into a contract under which Ben agrees to cater Ivy's wedding in exchange for a cash down payment. The contract expressly prohibits any transfer of rights. A contract right may be transferred, however, if the transfer involves​

Dharma enters into a contract to manage the operations of Esther's dental office for one year, renewable for subsequent one-year terms. If this contract is discharged like most contracts, it will be​

Lew's Landscaping Service substantially performs its contract with Metro Office Park. Metro's duty to perform​

Restoration, Inc., enters into a contract to refurbish a train depot for Dining, Inc., to open as Whistle Stop. If Restoration completes most of the work promised in the contract, its performance will be​

Joy and Kris enter into a contract for Kris to lay sod in Joy's yard for which she agrees to pay Kris. When Kris's schedule conflicts, she contacts Leza, to whom Kris "assigns all rights under the contract." Kris is​

Mai is a third party beneficiary under a contract between Novia and Opie. Novia and Opie can modify or rescind their contract without Mai's consent​

Ian owes Jo $5,000. Jo assigns the right to this payment to Kyle. Notice by Jo to Ian of the assignment​

Ed's Electric substantially performs its contract with Forest Hills Apartments, Inc., to deliver and install an alarm system and parking lot lighting. Forest Hills is entitled to​

Laramie contracts to provide cattle-herding services to Miles for $1,400 per month. Laramie cannot transfer this duty​

A contract between Laser Equipment, Inc., and Medical Center contains a clause stating that any assignment is "void." This ordinarily prohibits

State University provides housing on campus and in some adjacent off-campus neighborhoods. To lease a university house or apartment, a person must be student at State. This requirement is

Eli owes Martin $10,000. Martin assigns the claim to Jack. Jack does not notify Eli of the assignment. A week later, Martin assigns the same claim to Allen. Allen immediately notifies Eli of the assignment. Allen

Market Company and Nick enter into a contract for Nick to cut and trim the landscaping around Market's building before a meeting of the company's sales staff. When Nick's schedule conflicts, his transfer of the duties of cutting and trimming to Otis is

Marco and Ned enter into a contract for the sale of Marco's apartment for which Ned agrees to pay him $100,000. Marco cannot prohibit Ned from transferring his right to the ownership of the apartment because such a prohibition is

Paolho and Roth agree that Paolho will fix Roth's boat dock in exchange for $5,000. Paolho spends half of the amount due under the contract to acquire the materials for the job from Sav-U Economy Lumber. Sav-U is

Gavin takes out an insurance policy on her car. Gavin can assign his policy to a third party

Real Apps, Inc., enters into a contract with SalesCorp to create an app for the firm. To fulfill the contract, Real Apps hires Tad and ten other student interns. With respect to the contract between Real Apps and SalesCorp, Tad is

Ann offers to buy Beth's land only if an appraiser estimates that its current value is more than a certain price. Later, the appraiser deems the worth of the land to be less than Beth's price. Ann and Beth's obligations

Ben and Ivy enter into a contract under which Ben agrees to cater Ivy's wedding in exchange for a cash down payment. The contract expressly prohibits any transfer of rights. A contract right may be transferred, however, if the transfer involves

Dharma enters into a contract to manage the operations of Esther's dental office for one year, renewable for subsequent one-year terms. If this contract is discharged like most contracts, it will be

Lew's Landscaping Service substantially performs its contract with Metro Office Park. Metro's duty to perform

Restoration, Inc., enters into a contract to refurbish a train depot for Dining, Inc., to open as Whistle Stop. If Restoration completes most of the work promised in the contract, its performance will be

Joy and Kris enter into a contract for Kris to lay sod in Joy's yard for which she agrees to pay Kris. When Kris's schedule conflicts, she contacts Leza, to whom Kris "assigns all rights under the contract." Kris is

Mai is a third party beneficiary under a contract between Novia and Opie. Novia and Opie can modify or rescind their contract without Mai's consent

Ian owes Jo $5,000. Jo assigns the right to this payment to Kyle. Notice by Jo to Ian of the assignment

Ed's Electric substantially performs its contract with Forest Hills Apartments, Inc., to deliver and install an alarm system and parking lot lighting. Forest Hills is entitled to

Laramie contracts to provide cattle-herding services to Miles for $1,400 per month. Laramie cannot transfer this duty