Question 1

Merry Music Inc. and Nayda enter into a contract for Nayda to write six songs for which Merry Music agrees to pay her. Nayda transfers her right to payment under the contract to Omni Artists Agency. In the transfer of rights,Nayda is

Accepted Answer

Nayda is transferring her right to payment to Omni Artists Agency, which makes her an assignor. An assignor is the person who transfers their rights under a contract to another person or entity. A delegator is a person who transfers their duties under a contract to another person, an obligor is someone who owes a duty to perform under a contract, and a third party beneficiary is a person who benefits from a contract but is not a party to the contract.

Question 2

Richly Retail Outlets,Inc.,contracts with Stand-Rite Contractors to build a store. Stand-Rite assigns the contract to Town Builders,which has a poor record of completing projects. Richly could most successfully argue that the contract cannot be assigned because

Accepted Answer

The best choice is C because the assignment will materially increase the risk of nonperformance. Richly can argue that Town Builders has a poor record of completing projects, which increases the risk that the store may not be built according to specifications or completed on time. This is a valid reason to prevent the assignment of the contract. Consent to the assignment (A), adequate consideration (B), and being an original party to the deal (D) are not relevant factors in this scenario.

Question 3

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

Accepted Answer

In states that follow the English rule, the first assignee has priority unless the second assignee gives notice to the debtor before the first assignee does. Since Jack did not notify Eli of the assignment, Allen has priority to payment. In states that follow the American rule, the first assignee to give notice to the debtor has priority.

Question 4

D'Alemberte contracts with Ella to render personal nursing services for the benefit of Federica. This is

Accepted Answer

This is a third party beneficiary contract because Federica is intended to benefit from the contract between D'Alemberte and Ella.

Question 5

Bill and Charlene enter into a contract for the clearing,plowing,and preparing of Charlene's 100-acre tract for which she agrees to pay $1,000. Bill transfers his duty under this contract to Dewey. Dewey is

Accepted Answer

The answer of Bill and Charlene enter into a contract...

Question 6

A contract between Laser Maintenance,Inc.,and Medical Vision Operation Corporation contains a clause stating that any assignment is "void." This ordinarily prohibits

Accepted Answer

The clause stating that any assignment is "void" means that no assignment is permitted under any circumstances. This prohibits any and all assignments, not just certain types of assignments.

Question 7

Wilma owes Jill $5,000. Jill assigns the claim to the funds to Andrew. Jill

Accepted Answer

An assignment of a claim does not require the assignor to notify the debtor for the assignment to be effective. The debtor should be notified to ensure they pay the correct party, but it is not a legal requirement for the assignment itself.

Question 8

Opportunity Market Company (OMC)and Pierce enter into a contract for Pierce to cut and trim the landscaping around OMC's building before a meeting of the company's sales staff. When Pierce's schedule conflicts,he asks Rachel to do the cutting and trimming. This transfer of duties is

Accepted Answer

This is a delegation, as Pierce is transferring his duties under the contract to Rachel. An assignment would involve transferring the rights, rather than the duties, under the contract to a third party. A third party beneficiary contract involves a third party receiving benefits under the contract, which is not the case here. Prohibitions are not relevant to this scenario.

Question 9

Revenue & Sales Corporation and Software Solutions,Inc.,enter into a contract for the design of custom software for which Revenue & Sales agrees to pay $4,500. Software Solutions transfers the right to payment under the contract to Creditline Company. Creditline is

Accepted Answer

Creditline Company is an assignee, as they are the party to whom Software Solutions transferred the right to payment under the contract.

Question 10

Dyantakes out an insurance policy on her car. Dyan can assign her policy to a third party

Accepted Answer

The answer of Dyantakes out an insurance policy on her...

Question 11

Will owes Jenny $1,000. Brad owes Will $1,000. Will unconditionally assigns his rights to Jenny. Will's right to the $1,000 is then

Accepted Answer

When Will unconditionally assigns his rights to Jenny, this means that he has legally transferred his right to receive $1,000 to Jenny. Thus, his right to the $1,000 is extinguished, as he can no longer claim it from Brad since he has assigned his right to Jenny.

Question 12

Pico,a famous chef,agrees to give ten culinary les-sons to Rhoda in exchange for $1,200. Pico's attempt to transfer his contract duties to Sven,an unknown sous-chef,will probably be

Accepted Answer

The answer of Pico,a famous chef,agrees to give ten culinary...

Question 13

Ilene and Jerry enter into a contract under which Ilene agrees to provide groundskeeping services for Jerry's Family Fun Center. Under an anti-delegation clause,the contract can prohibit and prevent the transfer of

Accepted Answer

The answer of Ilene and Jerry enter into a contract...

Question 14

Uri and Victor enter into a contract by which Uri promises to deliver business cards,advertising banners,and other marketing materials to Victor. Uri later transfers his duty under the contract to Wren. Uri is

Accepted Answer

Uri is delegating his duty under the contract to Wren, therefore he is a delegator. An assignor transfers his rights under a contract to another party, while a delegatee receives the duty to perform under the contract from another party. An assignee is the party who receives the rights under a contract from another party.

Question 15

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

Accepted Answer

Prohibiting the transfer of property rights is against public policy because it restricts the free flow of goods and services in the marketplace. Contracts that violate public policy are considered unenforceable.

Question 16

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

Accepted Answer

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

Question 17

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

Accepted Answer

Kris is still responsible for fulfilling the contract with Joy, and therefore liable to Joy if Leza does not perform. Assigning rights under a contract does not absolve the original party of their responsibilities under the contract.

Question 18

Phillip assigns his rights under a contract with Maria to his college roommate,John. Neither Phillip nor John notifies Maria of the assignment. The assignment

Accepted Answer

The assignment is immediately effective, and neither Phillip nor John is required to notify Maria for the assignment to become valid. However, if Maria sends payment to Phillip, John cannot collect it as he is not mentioned in the contract.

Question 19

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

Accepted Answer

The transfer of a right to receive payment is generally allowed unless otherwise prohibited by the contract or by law. In this case, the contract does not prohibit the transfer of this right, so it can be transferred. Options B and C are not relevant to the transfer of contract rights, and option D is incorrect as it contradicts the premise that the transfer is prohibited by the contract.

Question 20

Leon contracts to install automatic watering troughs in Kendall's dairy barn. When Leon becomes seriously ill,he contracts with Jake to install the troughs. Jake is unreliable and never shows up to do the work. Kendall can sue

Accepted Answer

Kendall can sue either Jake or Leon because Leon delegated the duty to Jake, but Leon remains liable for the contract's performance.

Quiz 18: Third Party Rights