The Weyburn Farmers' Co-op contracted to sell a carload of grain to Mr.Takemori for $2000.The co-op assigned,in writing,its contractual right to receive the $2000 to the Royal Bank,to which it was indebted.The Royal Bank gave written notice of the assignment to Takemori.Unknown to the buyer and the seller,at the time of the contract the grain had been destroyed because of a train derailment caused by the negligence of the train conductor.Based on these facts,which of the following is true?
A) The Royal Bank, the assignee, will receive the $2000 because it could prove privity of contract with Takemori.
B) The Royal Bank will receive part payment from Takemori.
C) The Royal Bank will receive nothing from Takemori, because Takemori owes nothing to the Co-op.
D) The Royal Bank will receive $2000 from Takemori because there was an assignment in writing and that is the sole test for determining if the assignee will be paid the amount of the assignment.
E) Because of the conductor's negligence, the railroad will have to honour Mr. Takemori's contract with the Royal Bank.

Question

Quizplus · Accepted Answer

Takemori owes nothing to the Co-op because the grain was destroyed due to unforeseeable events. The Royal Bank, as an assignee, cannot claim payment from Takemori in this situation. The principle of privity of contract does not apply here because there was no valid contract between the buyer and the seller due to the destruction of the grain. The assignment in writing does not give the Royal Bank the right to claim payment from Takemori in such a situation. The responsibility for the loss incurred due to the negligent act of the train conductor falls on the railroad, not on Takemori.

The Weyburn Farmers' Co-Op Contracted to Sell a Carload of Grain