Business Law- Chapter 15

Question 1

Privity of Contract

Answer 1

The state of two specified parties being in a contract.

Question 2

Assignment

Answer 2

The transfer of contractual rights by an obligee to another party.

Question 3

Assignor

Answer 3

An obligee who transfers a right.

Question 4

Assignee

Answer 4

A party to whom a right has been transferred.

Question 5

Anti-assignment clause

Answer 5

A clause that prohibits the assignment of rights under the contract.

Question 6

Delegation of Duties

Answer 6

A transfer of contractual duties by an obligor to another part for performance.

Question 7

Delegator

Answer 7

An obligor who has transferred her duty.

Question 8

Delegatee

Answer 8

A party to whom a duty has been transferred.

Question 9

Assumption of Duties

Answer 9

A situation in which a delegation of duties contains the term assumption, I assume the duties, or other similar language. In such a case, the delegatee is legally liable to the obligee for nonperformance.

Question 10

Anti-delegation Clause

Answer 10

A clause that prohibits the delegation of duties under the contract.

Question 11

Intended Third-party Beneficiary

Answer 11

A third party who is not in privity of contract but who has rights under the contract and can enforce the contract against the promisor.

Question 12

Donee Beneficiary Contract

Answer 12

A contract entered into with the intent to confer a benefit or gift on an intended third party.

Question 13

Donee Beneficiary

Answer 13

A third party on whom a benefit is to be conferred.

Question 14

Creditor Beneficiary Contract

Answer 14

A contract that arises in the following situation: 1. a debtor borrows money, 2. the debtor signs an agreement to pay back the money plus interest, 3. The debtor sells the item to a third party before the loan is paid off, and 4. the third party promises the debtor that she will pay to remainder of the loan to the creditor.

Question 15

Creditor Beneficiary

Answer 15

An original creditor who becomes a beneficiary under the debtor’s new contract with another party.

Question 16

Incidental Beneficiary

Answer 16

A party who is unintentionally benefited by other people’s contracts.

Question 17

Covenant

Answer 17

An unconditional promis to perform

Question 18

Condition

Answer 18

A qualification of a promise that becomes a covenant if it is met. There are three types of conditions: precedent, subsequent and concurrent.

Question 19

Condition precedent

Answer 19

A condition that requires the occurrence of an event before a party is obligated to perform a duty under a contract.

Question 20

Personal Satisfaction Test

Answer 20

A subjective test that applies to contracts involving personal taste and comfort.

Question 21

Reasonable Person Test

Answer 21

An objective test that applies to commercial contracts involving mechanical fitness.

Question 22

Condition Subsequent

Answer 22

A condition whose occurrence or nonoccurrence of a spevifiv event automatically excuses the performance of an existing contractual duty to perform.

Question 23

Concurrent Condition

Answer 23

A condition that exists when the parties to a contract must render performance simultaneously; each party’s absolute duty to perform is conditioned on the other party’s absolute duty to perform.

Question 24

Implied-in-Fact Condition

Answer 24

A condition that can be implied from the circumstances surrounding a contract and the parties’ conduct.

Question 25

Novation Agreement

Answer 25

An agreement that substitution a new party for one of the original contraction parties and relieves the exiting party of liability on the contract.

Question 26

Accord and Satisfaction

Answer 26

The settlement of a contract dispute.

Question 27

Impossibility of Performance

Answer 27

Nonperformance that is excused if a contract becomes impossible to perform. It must be objective, impossibility, not subjective.

Question 28

force majeure clause

Answer 28

A clause in a contract which the parties specify certain events that will excuse nonperformance.

Question 29

Commercial Impracticability

Answer 29

Nonperformance that is excused if an extreme or unexpected development or expense makes it impractical for the promisor to perform.

Question 30

Statute of Limitations

Answer 30

A statutes that establishes the time period during which a lawsuit must be brought; if the lawsuit must be brought within this period, the injured party loses the right to sue.