Question 1

Fez makes and sells camping gear. Fez and Gobi enter into a contract for a delivery of the gear to Gobi's Outfitters retail locations for an invoiced price. Fez transfers the right to payment under the contract to Haulers Distribution Inc. This transfer is

Accepted Answer

A)  a delegation.
B)  an assignment.
C)  a third party beneficiary contract.
D)  prohibited.E) None of the above
F) A) and B)

Question 2

Any beneficiary to a contract who is not deemed an intended beneficiary is an incidental beneficiary.

Accepted Answer

A) True 
 B)False

Question 3

A contracting party's transfer of the contract rights or duties to another person is an exception to the rule of privity of contract.

Accepted Answer

A) True 
 B)False

Question 4

Harry assigns his rights under a contract with Irma to his college roommate, Jake. Neither Harry nor Jake notifies Irma of the assignment. The assignment

Accepted Answer

A)  will not be effective until notice is given to Irma.
B)  will become effective after thirty days even if no notice is given to Irma.
C)  is effective immediately.
D)  is invalid.E) A) and B)
F) None of the above

Question 5

No special form is required to make a delegation of duties-as long as the delegator expresses an intention to make the delegation, it is effective.

Accepted Answer

A) True 
 B)False

Question 6

Jan is obligated under a contract to pay Katie $500. Katie assigns the right to receive the funds to Loren. If Jan does not pay the debt, the obligee can

Accepted Answer

A)  extinguish the contract rights of the obligor.
B)  demand performance of the deal from any of the original parties.
C)  enforce the payment in court.
D)  none of the choices.E) A) and D)
F) B) and D)

Question 7

Music Masters Inc. enters into a contract to pay Nag for a dozen original songs. Nag transfers the right to payment under the contract to Omni Artists. After the transfer, Nag's contract right to the payment is

Accepted Answer

A)  unaffected.
B)  extinguished.
C)  conditional.
D)  secondary.E) A) and C)
F) A) and D)

Question 8

A surgeon can delegate his or her contractual duty to operate on a certain patient because the rendering of medical services is not personal performance.

Accepted Answer

A) True 
 B)False

Question 9

A creditor beneficiary cannot sue a promisor directly to enforce a contract.

Accepted Answer

A) True 
 B)False

Question 10

The unconditional assignment of rights under a contract extinguishes the rights of the assignee.

Accepted Answer

A) True 
 B)False

Question 11

Rendering contract performance directly to a third party does not indicate whether that party is an incidental or an intended beneficiary.

Accepted Answer

A) True 
 B)False

Question 12

Elin owes Floyd $10,000. Floyd assigns the claim to Gary. Gary does not notify Elin of the assignment. Later, Floyd assigns the same claim to Holly. Holly immediately notifies Elin of the assignment. Holly has priority to payment in

Accepted Answer

A)  all states.
B)  states that follow the English rule.
C)  no state.
D)  most states.E) B) and D)
F) B) and C)

Question 13

A-One Landscapers, Inc., owes Finance Company $5,000. A-One enters into a contract with Office Park under which A-One promises to maintain the landscaping on Office Park's property. Under the contract, Office Park promises to pay Finance the amount that will be due A-One until A-One's debt to Finance is paid. A-One performs as promised, but Office Park does not pay Finance. Can Finance succeed in a suit against Office Park? Why or why not?

Accepted Answer

Finance could succeed in a suit against Office Park. When a party promises to perform under a contract with the express intent that the other party's payment benefit a third party, the third party is an intended beneficiary. Assuming a contract is otherwise enforceable, an intended beneficiary can successfully sue to enforce the contract under which he or she will benefit. 
The contract between A-One and Office Park expressly states that Office Park's payment for A-One's performance is to go directly to Finance. Thus, it is a third party beneficiary contract. Finance, the third party beneficiary, is, under the terms of the contract, an intended beneficiary. As such, Finance can successfully sue Office Park to enforce its promise to pay A-One's debt.

Question 14

Once the obligor receives proper notice, only performance to the assignee can discharge the obligor's obligation.

Accepted Answer

A) True 
 B)False

Question 15

The rights under an insurance policy can normally be assigned

Accepted Answer

A)  if the assignment involves only a payment of benefits.
B)  if the assignment significantly changes the risk to the insurer.
C)  if the assignment significantly alters the duties of the insurer.
D)  under no circumstances.E) C) and D)
F) A) and B)

Question 16

Under a contract, an assignment of negotiable instruments

Accepted Answer

A)  cannot be prohibited.
B)  can be prohibited only by an anti-assignment clause.
C)  can be prohibited only by the obligor.
D)  is prohibited under any circumstances.E) A) and B)
F) C) and D)

Question 17

Following a transfer by a lender of a right to receive payments on a mortgage, the homebuyer must continue to make those payments to the original lender.

Accepted Answer

A) True 
 B)False

Question 18

Mesa County contracts with New Construct Inc. to build a courthouse. New Construct hires Odell to excavate the site. Odell's work damages adjacent properties. Mesa files a suit against the excavator, who argues that the county is not named in his contract with New Construct. Most likely, the court will hold that Odell is

Accepted Answer

A)  not liable because Mesa is not named in Odell's contract.
B)  not liable because Odell's contract was with New Construct, not Mesa.
C)  liable on the ground that Mesa is an incidental third-party beneficiary.
D)  liable on the ground that Mesa is an intended third-party beneficiary.E) All of the above
F) A) and B) D

Question 19

The rights under a contract for personal services can normally be assigned

Accepted Answer

A)  if all that remains on the deal is a payment of money.
B)  if the contract is executory.
C)  if the personal services are unique to the party rendering them.
D)  under no circumstances.E) All of the above
F) None of the above A

Question 20

Commercial Rebuild LLC enters into a contract to remodel Dockside Marina, agreeing to use only products from Eagle Supplies. Halfway through the project, Commercial refuses to finish the job. The contract can be enforced against Commercial by

Accepted Answer

A)  Dockside only.
B)  Eagle only.
C)  Dockside or Eagle.
D)  any interested third party, including a contracting party's employee.E) A) and B)
F) A) and C)

Exam 17: Third Party Rights

Fez makes and sells camping gear. Fez and Gobi enter into a contract for a delivery of the gear to Gobi's Outfitters retail locations for an invoiced price. Fez transfers the right to payment under the contract to Haulers Distribution Inc. This transfer is

Correct Answer
verified

Any beneficiary to a contract who is not deemed an intended beneficiary is an incidental beneficiary.

Correct Answer
verified

A contracting party's transfer of the contract rights or duties to another person is an exception to the rule of privity of contract.

Correct Answer
verified

Harry assigns his rights under a contract with Irma to his college roommate, Jake. Neither Harry nor Jake notifies Irma of the assignment. The assignment

Correct Answer
verified

No special form is required to make a delegation of duties-as long as the delegator expresses an intention to make the delegation, it is effective.

Correct Answer
verified

Jan is obligated under a contract to pay Katie $500. Katie assigns the right to receive the funds to Loren. If Jan does not pay the debt, the obligee can

Correct Answer
verified

Music Masters Inc. enters into a contract to pay Nag for a dozen original songs. Nag transfers the right to payment under the contract to Omni Artists. After the transfer, Nag's contract right to the payment is

Correct Answer
verified

A surgeon can delegate his or her contractual duty to operate on a certain patient because the rendering of medical services is not personal performance.

Correct Answer
verified

A creditor beneficiary cannot sue a promisor directly to enforce a contract.

Correct Answer
verified

The unconditional assignment of rights under a contract extinguishes the rights of the assignee.

Correct Answer
verified

Rendering contract performance directly to a third party does not indicate whether that party is an incidental or an intended beneficiary.

Correct Answer
verified

Elin owes Floyd $10,000. Floyd assigns the claim to Gary. Gary does not notify Elin of the assignment. Later, Floyd assigns the same claim to Holly. Holly immediately notifies Elin of the assignment. Holly has priority to payment in

Correct Answer
verified

Once the obligor receives proper notice, only performance to the assignee can discharge the obligor's obligation.

Correct Answer
verified

The rights under an insurance policy can normally be assigned

Correct Answer
verified

Under a contract, an assignment of negotiable instruments

Correct Answer
verified

Following a transfer by a lender of a right to receive payments on a mortgage, the homebuyer must continue to make those payments to the original lender.

Correct Answer
verified

Correct Answer
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D

The rights under a contract for personal services can normally be assigned

Correct Answer
verified
A

Commercial Rebuild LLC enters into a contract to remodel Dockside Marina, agreeing to use only products from Eagle Supplies. Halfway through the project, Commercial refuses to finish the job. The contract can be enforced against Commercial by

Correct Answer
verified

Exam 17: Third Party Rights

Fez makes and sells camping gear. Fez and Gobi enter into a contract for a delivery of the gear to Gobi's Outfitters retail locations for an invoiced price. Fez transfers the right to payment under the contract to Haulers Distribution Inc. This transfer is

Correct AnswerverifiedShow Answer

Any beneficiary to a contract who is not deemed an intended beneficiary is an incidental beneficiary.

Correct AnswerverifiedShow Answer

A contracting party's transfer of the contract rights or duties to another person is an exception to the rule of privity of contract.

Correct AnswerverifiedShow Answer

Harry assigns his rights under a contract with Irma to his college roommate, Jake. Neither Harry nor Jake notifies Irma of the assignment. The assignment

Correct AnswerverifiedShow Answer

No special form is required to make a delegation of duties-as long as the delegator expresses an intention to make the delegation, it is effective.

Correct AnswerverifiedShow Answer

Jan is obligated under a contract to pay Katie $500. Katie assigns the right to receive the funds to Loren. If Jan does not pay the debt, the obligee can

Correct AnswerverifiedShow Answer

Music Masters Inc. enters into a contract to pay Nag for a dozen original songs. Nag transfers the right to payment under the contract to Omni Artists. After the transfer, Nag's contract right to the payment is

Correct AnswerverifiedShow Answer

A surgeon can delegate his or her contractual duty to operate on a certain patient because the rendering of medical services is not personal performance.

Correct AnswerverifiedShow Answer

A creditor beneficiary cannot sue a promisor directly to enforce a contract.

Correct AnswerverifiedShow Answer

The unconditional assignment of rights under a contract extinguishes the rights of the assignee.

Correct AnswerverifiedShow Answer

Rendering contract performance directly to a third party does not indicate whether that party is an incidental or an intended beneficiary.

Correct AnswerverifiedShow Answer

Elin owes Floyd $10,000. Floyd assigns the claim to Gary. Gary does not notify Elin of the assignment. Later, Floyd assigns the same claim to Holly. Holly immediately notifies Elin of the assignment. Holly has priority to payment in

Correct AnswerverifiedShow Answer

Once the obligor receives proper notice, only performance to the assignee can discharge the obligor's obligation.

Correct AnswerverifiedShow Answer

The rights under an insurance policy can normally be assigned

Correct AnswerverifiedShow Answer

Under a contract, an assignment of negotiable instruments

Correct AnswerverifiedShow Answer

Following a transfer by a lender of a right to receive payments on a mortgage, the homebuyer must continue to make those payments to the original lender.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedD

The rights under a contract for personal services can normally be assigned

Correct AnswerverifiedA

Commercial Rebuild LLC enters into a contract to remodel Dockside Marina, agreeing to use only products from Eagle Supplies. Halfway through the project, Commercial refuses to finish the job. The contract can be enforced against Commercial by

Correct AnswerverifiedShow Answer

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D

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A

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