Question 1

A third party's right to control the details of performance of a contract indicates that the third party is an intended beneficiary.

Accepted Answer

If a third party has the right to control the details of performance of a contract, it generally indicates that the third party was intended to benefit from the contract and therefore has the right to enforce its terms as an intended beneficiary.

Question 2

Lestor and MaryElise enter into a contract. Lestor agrees to mow MaryElise's yard every week for the summer. MaryElise is
A) ​the obligor.
B) ​the obligee.
C) ​the assignee.
D) ​the assignor.

Accepted Answer

MaryElise is the one who will receive the performance of the obligation (having her yard mowed every week), making her the obligee. Lestor is the one who will perform the obligation, making him the obligor. The terms assignee and assignor are not relevant in this scenario.

Question 3

A creditor beneficiary is any third person who receives a benefit from a contract even though that person's benefit is not the reason the contract was made.

Accepted Answer

A creditor beneficiary is a third party who benefits from a contract because the contract's performance fulfills a duty or obligation owed to them by one of the parties involved in the contract.

Question 4

Faye makes and sells furniture. Faye and Glen enter into a contract for the delivery of Faye's products to Glen's Gear retail locations for which he agrees to pay the invoiced price. Faye transfers her right to payment under the contract to Haulers Trucking Company. This transfer is
A) ​a delegation.
B) ​an assignment.
C) ​a third party beneficiary contract.
D) ​alienation.

Accepted Answer

The transfer of Faye's right to payment to Haulers Trucking Company is an assignment, as it involves the transfer of a contractual right (the right to receive payment) from one party (Faye) to another party (Haulers Trucking Company).

Question 5

An incidental third party beneficiary cannot sue to enforce the contract because the benefit is unintentional.

Accepted Answer

An incidental third party beneficiary is someone who gains a benefit from a contract but was not the intended beneficiary. As a result, they cannot sue to enforce the contract. Only intended third party beneficiaries have the ability to enforce a contract.

Question 6

A delegation relieves the party making it of the obligation to perform.

Accepted Answer

A delegation transfers the obligation to perform to another party, but it does not relieve the original party of the obligation. The original party remains responsible for ensuring that the delegated task is completed properly.

Question 7

Both intended and incidental beneficiaries acquire legal rights in a contract.

Accepted Answer

Only intended beneficiaries acquire legal rights in a contract, as they are explicitly meant to benefit from the agreement. Incidental beneficiaries do not have such rights because they are not the primary focus of the contract's benefits.

Question 8

Steel, Inc., and Transport Company enter into a contract. UniOil Corporation, which will indirectly benefit from the deal, is prevented from having rights under the contract by the principle of
A) ​assignment.
B) ​delegation.
C) ​privity.
D) ​alienation.

Accepted Answer

The principle of privity prevents a third party, such as UniOil Corporation, from having rights under a contract between two other parties, Steel, Inc. and Transport Company, unless explicitly stated in the contract or allowed by law. Name of the third party, UniOil Corporation, is not mentioned in the contract, therefore, principle of privity applies in this case.

Question 9

An intended third party beneficiary cannot enforce the contract against the original parties once the rights of the third party have vested.

Accepted Answer

The answer of An intended third party beneficiary cannot enforce...

Question 10

Brock enters into a contract with Casey's Coin-op Laundry to move a suite of dryers from one of Casey's locations to another. Brock subsequently transfers this duty to Darin. Darin is
A) ​a delegatee.
B) ​an obligee.
C) ​a third-party beneficiary.
D) ​an assignee.

Accepted Answer

Darin is a delegatee because Brock has transferred his duty to perform under the contract to Darin.

Question 11

An intended beneficiary can sue directly to enforce a promisor's promise.

Accepted Answer

This is the principle of third-party beneficiary contracts, where the intended beneficiary can enforce their rights under the contract directly against the promisor.

Question 12

There are no exceptions to the rule that any duty can be delegated.

Accepted Answer

While many duties can be delegated, there are some duties that cannot be delegated. For example, the duty to make decisions requiring professional judgment or to perform personal services cannot be delegated.

Question 13

​Expressly designating a third party as a beneficiary in a contract does not indicate whether the beneficiary is intended or incidental.

Accepted Answer

The answer of ​Expressly designating a third party as a...

Question 14

All that a delegator needs to do to make a delegation effective is to express an intention to make the delegation.

Accepted Answer

Yes, all that a delegator needs to do to make a delegation effective is to express an intention to make the delegation. However, there may be certain legal or formal requirements for certain types of delegations depending on the jurisdiction and context.

Question 15

The rights of a third party beneficiary under a contract do not vest if the third party materially changes his or her position in justifiable reliance on the promise.

Accepted Answer

This is known as the doctrine of promissory estoppel, which prevents the promisor from revoking the promise if the promisee has relied on it to their detriment. The third party beneficiary will also be protected by this doctrine if they have materially changed their position in reliance on the promise. Therefore, the rights of a third party beneficiary will vest if they have relied on the promise to their detriment.

Question 16

No contract can prohibit delegation of the duties of the contract.

Accepted Answer

Many contracts include clauses that explicitly prohibit the delegation of duties to another party without prior consent, to ensure that the original party's obligations are satisfactorily met.

Question 17

If a contract requires that performance be rendered directly to a third party, the third party is an intended beneficiary.

Accepted Answer

When a contract explicitly states that the performance should be rendered directly to a third party, it creates a third-party beneficiary contract, and the third party becomes an intended beneficiary. This means that the third party has the right to enforce the contract and receive the benefits therein. Therefore, the statement is true.

Question 18

Rachel and Stuart enter into a contract for the sale of Rachel's textbook at the end of the fall semester for which Stuart agrees to pay $75. Rachel wants to transfer her right to payment for the book to Terry. This transfer is
A) ​a delegation.
B) ​an assignment.
C) ​an alienation.
D) ​a third-party beneficiary contract.

Accepted Answer

This transfer is an assignment as Rachel is transferring her right to payment (benefit) to Terry. Terry is not assuming the obligation to perform under the contract, therefore, it is not a delegation. Alienation and third-party beneficiary contracts do not apply in this situation.

Question 19

If a third party has the right to control the details of contract performance, the third party is an incidental beneficiary.

Accepted Answer

If a third party has the right to control the details of contract performance, the third party is not an incidental beneficiary, but rather is considered a party to the contract and has privity of contract.

Question 20

An "assignment of all rights" creates an assignment of rights and a delegation of duties.

Accepted Answer

An "assignment of all rights" means that the assignor transfers all of their rights and interests in a particular property or agreement to the assignee. This includes a delegation of duties that are necessary to fulfill those rights. Therefore, both rights and duties are transferred in an assignment of all rights.

Quiz 17: Third Party Rights