Chapter 15. Assignment And Delegation (316-343)

Question 1

B, the owner of a parcel of land, contracts to sell the parcel to A. A contracts to assign the contract to C or to convey the parcel to C. If B doesn’t perform, what recourse does C have?

Answer 1

Even though C is not an assignee, C can sue A and B to compel A to assert for C’s benefit A’s right to specific performance by B. Restatement 2d of Contracts § 330(c)

Question 2

A has a right to $100 against B. A assigns his right to C. Is this assignment effective?

Answer 2

A’s right is thereby extinguished, and C acquires a right against B to receive $100. Restatement 2d of Contracts § 317(a)

Question 3

A purports to assign to C a right to receive $100 from B. A has no such right. Is this assignment effective?

Answer 3

The assignment is ineffective, and C can recover damages from A under the rules stated in § 333. Restatement 2d of Contracts § 317(a)

Question 4

B contracts to support A for the remainder of A’s life. A confers this assignment to C. Is this assignment effective?

Answer 4

A cannot by assignment confer on C a right to have B support C. Restatement 2d of Contracts § 317(d)

Question 5

B contracts to support A for the remainder of A’s life. B commits a material breach of the contract, and A assigns his right of action to C. Is this assignment effective?

Answer 5

The assignment is effective. Restatement 2d of Contracts § 317(d)

Question 6

B contracts to sell to A for three years 250 tons of ice a week, and A contracts to pay on delivery a stated price per ton. A assigns his right under the contract to C. Is this assignment effective?

Answer 6

The assignment is effective. C’s right to delivery is conditional on payment, but payment by C satisfies the condition. Restatement 2d of Contracts § 317(d)

Question 7

B sells his business to A and makes a valid contract not to compete. A sells the business to C and assigns to C the right to have B refrain from competition. Is this assignment effective?

Answer 7

The assignment is effective with respect to competition with the business derived from B. The good will of the business, with contractual protection against its impairment, is treated as an assignable asset. Restatement 2d of Contracts § 317(d)

Question 8

For value A, a public official, assigns to C salary or fees already earned and also his unearned salary for the ensuing month. Is this assignment effective?

Answer 8

The assignment of the earned salary or fees is effective, in the absence of a contrary statute, but the assignment of unearned salary is against public policy. Restatement 2d of Contracts § 317(e)

Question 9

A contracts with B, a physician, for medical services, and later claims that B’s negligence in performing the services caused personal injury to A in violation of B’s contractual duty to use due care. A assigns the claim to C. Is this assignment effective?

Answer 9

The assignment is ineffective. Restatement 2d of Contracts § 317(e)

Question 10

A, a retired officer of the United States Army, borrows money from C and as security for the loan assigns to C whatever is due or shall become due to A as retired pay. Is this assignment effective?

Answer 10

The assignment is ineffective except as permitted by statute under regulations prescribed by the Secretary of the Army. Restatement 2d of Contracts § 317(e)

Question 11

A owes B $100, and asks C to pay B. If C pays B, is this payment effective? Will it depend on C having assumed A’s duty or whether C is an agent and/or assignee of A?

Answer 11

Payment or tender to B by C has the effect of payment or tender by A. Furthermore, these stated consequences are not affected by the fact that C is an agent of A or an assignee of A’s right to return performance or that C has or has not assumed A’s duty (see § 318(b)). Restatement 2d of Contracts § 318(a)

Question 12

A contracts to deliver to B coal of specified kind and quality. A delegates the performance of this duty to C, who tenders to B coal of the specified kind and quality. If C pays B, is this payment effective? Will it depend on C having assumed A’s duty or whether C is an agent and/or assignee of A?

Answer 12

The tender has the effect of a tender by A. Furthermore, these stated consequences are not affected by the fact that C is an agent of A or an assignee of A’s right to return performance or that C has or has not assumed A’s duty (see § 318(b)). Restatement 2d of Contracts § 318(a)

Question 13

A contracts to build a building for B in accordance with specifications, and delegates the plumbing work to C. If C performs, is it effective? Will it depend on C having assumed A’s duty or whether C is an agent and/or assignee of A?

Answer 13

Performance by C has the effect of performance by A. Furthermore, these stated consequences are not affected by the fact that C is an agent of A or an assignee of A’s right to return performance or that C has or has not assumed A’s duty (see § 318(b)). Restatement 2d of Contracts § 318(a)

Question 14

A, a teacher employed in a public or private school, attempts to delegate the performance of his duties to B, a competent person. Is this effective? On what does it depend?

Answer 14

An offer by B to perform A’s duties need not be accepted, and actual performance by B without the assent of the employer will create no right in either A or B to the salary stated in A’s contract. Restatement 2d of Contracts § 318(c)

Question 15

A contracts with B, a corporation, to sing three songs over the radio as part of an advertisement of B’s product. Is this effective? On what does it depend?

Answer 15

A’s performance is not delegable unless B assents. Restatement 2d of Contracts § 318(c)

Question 16

A contracts with B that A will personally cut the grass on B’s meadow. Is this effective? On what does it depend?

Answer 16

A cannot effectively delegate performance of the duty to C, however competent C may be. Restatement 2d of Contracts § 318(c)

Question 17

A, a corporation, contracts with B to build a building. A delegates the entire performance to X and Y, the sole stockholders of A. Is this effective? On what does discharge of A’s duty depend?

Answer 17

Performance by X and Y in accordance with specifications discharges A’s duty, since the supervision is not materially changed. Restatement 2d of Contracts § 318(c)

Question 18

A borrows $50,000 from B and contracts to repay it. The contract provides that, if a corporation C is organized and assumes the debt under described conditions, A will be under no further obligation. C is organized and in good faith assumes the debt as provided. Is A’s duty discharged?

Answer 18

A is discharged. Restatement 2d of Contracts § 318(d)

Question 19

A contracts with B to cut the grass on B’s meadow. A delegates performance to C, who contracts with A to assume A’s duty and perform the work. C begins performance with B’s assent, but later breaks the contract. Is this effective? Is A’s duty discharged?

Answer 19

C is liable to B, but A is not discharged. Restatement 2d of Contracts § 318(d)

Question 20

A contracts with B, a city, to clean the streets of B weekly for five years in return for monthly payments. A delegates performance to C, and C substantially performs until B cancels the contract. Is this effective? On what does it depend?

Answer 20

C’s performance satisfies the condition of B’s duty to pay, whether C is A’s agent or an assignee from A. Restatement 2d of Contracts § 319(a)

Question 21

Under an option contract with A, B has a right to a conveyance of Blackacre on terms including execution of a promissory note secured by a mortgage on Blackacre. B assigns the contract to C, and C tenders a note executed by C but not by B. Is this effectively binding for A?

Answer 21

A is not bound to convey. Restatement 2d of Contracts § 319(b)

Question 22

A, a corporation, contracts with B to convey Blackacre to B upon completion of installment payments B contracts to make. The deed is to include a covenant against incumbrances which gives rights only to the immediate grantee. A assigns the contract and conveys the land to C. Is B duty-bound to complete the installment payments? On what does it depend?

Answer 22

B’s duty is conditional on adequate assurance that he will receive a deed directly from A. Restatement 2d of Contracts § 319(b)

Question 23

A, a corporation, contracts with B to convey Blackacre to B upon completion of installment payments B contracts to make. The deed is to include a covenant against incumbrances which gives rights only to the immediate grantee. B defaults and A becomes insolvent because land values are greatly reduced. A assigns the contract and conveys the land to C as a result of insolvency proceedings in which A is dissolved. What recourse does C have?

Answer 23

In the absence of a showing that an incumbrance exists, C may obtain a decree of specific performance against B conditional on deposit by C of a deed containing a covenant against incumbrances by C only. Restatement 2d of Contracts § 319(b)

Question 24

A, a corporation of State X, has a contract to act as B’s exclusive sales agent for two years in a region including State X. A liquidates and assigns the contract and delegates the duties under it to C, a corporation of State Y, a state outside the region. Is this effective?

Answer 24

B can properly treat the contract as terminated. Restatement 2d of Contracts § 319(b)

Question 25

In return for $100 paid by A, B promises to convey Blackacre for $10,000 on receipt of that amount within thirty days. A assigns the option to C. Is this effective? On what does it depend?

Answer 25

On C’s tender of $10,000 within thirty days, B is under a duty to convey Blackacre to C. Restatement 2d of Contracts § 320(a)

Question 26

In return for $100 paid by A, B promises to convey Blackacre to A, if A gives notice of acceptance within thirty days, for $10,000 of which $2,000 is to be paid on conveyance and the balance in four annual installments represented by notes. A assigns the option to C. Is this effective? On what does it depend?

Answer 26

The assignment is effective, but C’s right is conditional on tender of notes signed by A. Restatement 2d of Contracts § 320(a)

Question 27

A holds an insurance policy in which the insurer promises to pay him $1000 at the end of twenty years if A makes specified payments of premiums. Can A effectively assign his right?

Answer 27

A can assign his conditional right. Restatement 2d of Contracts § 320(b)

Question 28

A has a contract with B under which certain payments are to be made to A by B under a fixed schedule and other payments are to be made if B’s earnings exceed stated amounts. As security for a loan to A by C, A assigns to C A’s rights to payments by B, A to retain any payments falling due before default by A under the loan agreement. Is this assignment effective?

Answer 28

The assignment is effective according to its terms. Restatement 2d of Contracts § 320(b)

Question 29

A, a builder, and B, an owner of land, enter into a building contract. A assigns to C payments due or to become due him under the contract. Is this effective?

Answer 29

The assignment is effective. Restatement 2d of Contracts § 320(c)

Question 30

A, a builder, and B, an owner of land, enter into a building contract. B sells the land to D and assigns to D his right to performance by A. Is this effective?

Answer 30

The assignment is effective. Restatement 2d of Contracts § 320(c)

Question 31

A, a teacher employed in a public or private school, assigns to C the salary to be earned the following month. Is this effective?

Answer 31

In the absence of statute, the assignment is effective. Restatement 2d of Contracts § 320(c)

Question 32

A contracts with B, a city, to clean the streets of B weekly for five years in return for monthly payments. A assigns his rights under the contract to C, and C promises A to perform A’s duties under it. Is this effective? Does A still have a duty?

Answer 32

The assignment is effective. A is still bound to B, but as surety for C. Restatement 2d of Contracts § 320(d)

Question 33

A, a builder, and B, an owner of land, enter into a building contract. A enters into a contract with C that C will take A’s place in the building contract and that A will be freed from his obligation under it. B does not manifest assent or accept any performance from C. Is A’s assignment to C effective?

Answer 33

A is still bound to B. Restatement 2d of Contracts § 320(d)

Question 34

A and B contract that B will sell and deliver goods to A in monthly installments for six months and A will pay for them on delivery. A assigns his rights under the contract to C, who assumes the duty of payment. C refuses to accept any goods from B. Is A’s assignment to C effective? Who is liable to B?

Answer 34

Both A and C are subject to liability to B, A as surety for C. Restatement 2d of Contracts § 320(d)

Question 35

A and B contract that B will sell and deliver goods to A in monthly installments for six months and A will pay for them on delivery. A assigns his rights under the contract to C, who assumes the duty of payment. C and B, without consulting A, agree to and do postpone deliveries for three months. Is A’s duty discharged?

Answer 35

A’s duty is discharged. Restatement 2d of Contracts § 320(d)

Question 36

A and C, partners, contract with B to act as the exclusive distributor of B’s product in a specified territory. The contract is to last for one year, and they are to have an option to renew it from year to year. After six months A sells his interest in the contract to C and withdraws from the business. C gives notice of intention to renew, and B refuses to renew. Is B liable to C?

Answer 36

B is not subject to liability to C for the refusal. Restatement 2d of Contracts § 320(e)

Question 37

A, a corporation, leases railway cars to B by a contract providing that A will keep the cars in repair. A becomes insolvent, and as a result of insolvency proceedings A’s rights under the lease contract and A’s repair facilities and staff are transferred to C, a solvent corporation, which assumes the duty of repair and assures B of its readiness and willingness to carry out the terms of the lease. A remains in existence under court supervision. Is B’s duty discharged?

Answer 37

B remains obligated by the lease. Restatement 2d of Contracts § 320(e)

Question 38

A contracts to build a house for B for a stated price. The contract provides that if A performs any work on the house beyond what the specifications require, he shall have compensation therefor, to be determined by the architect. Before any such work has been agreed upon, A, for value, assigns his right to compensation for extra work to C. Subsequently A becomes bankrupt, and still later extra work under the contract is agreed upon and performed. Immediately on completion of the work A assigns the right to compensation to D. Is this effective?

Answer 38

The assignment to C is effective and is not defeated by A’s bankruptcy or the assignment to D. Restatement 2d of Contracts § 321(a)

Question 39

B employs A from week to week in his factory at a salary of $50 a week. A, in the first week of January, assigns to C any salary which he may earn during the last week in that month in his employment by B. Is this effective?

Answer 39

The assignment is effective, and if A works for B during that week B will come under a duty to C to pay him $50. Restatement 2d of Contracts § 321(c)

Question 40

B employs A at a stated rate of pay from day to day. A assigns to C whatever A may become entitled to from work done for B during the ensuing month. During the ensuing month A not only earns his regular pay but acquires a right to extra compensation in the course of his employment. Is this effective?

Answer 40

The assignment is effective both as to the right to regular pay and the right to extra compensation. Restatement 2d of Contracts § 321(c)

Question 41

In January A assigns to C as security for a loan the salary he expects to earn in March under his existing employment by B, though A has no contract with B to work during that month. A becomes bankrupt in February, and later receives a discharge in bankruptcy. He continues his employment during March. Is this effective? Is A’s debt discharged?

Answer 41

Even though the assignment is otherwise effective, A’s debt to C is discharged, and A’s March salary belongs to A free of C’s claim. Restatement 2d of Contracts § 321(c)

Question 42

A receives from B an order for brick to be used by B in performing an existing contract with D to build a school, with an assurance that A “has been awarded the job of furnishing bricks for the school.” Before prices or specifications for the brick have been determined, A assigns to C as security for a loan the money to become due from B for material for the school. The brick is later delivered as expected. Is this effective?

Answer 42

The assignment is effective. Restatement 2d of Contracts § 321(c)

Question 43

A is negotiating to sell to B property part of which is subject to a mortgage from A to C. In consideration of C’s release of the mortgage, A assigns to C a payment to be made by B. Later the same day A and B sign a contract to sell the property which provides for the payment expected. Is this effective?

Answer 43

Notwithstanding the lack of a continuing business relationship, the assignment to C is effective when the contract to sell is made. Restatement 2d of Contracts § 321(c)

Question 44

A is employed as a teacher for the school year by X, a municipality. A, in the expectation of employment by B, another municipality, for the following school year, assigns to C the salary for the first month of service which A may render for B. A is subsequently employed by B as expected, and A’s salary for the first month becomes due. C makes demand upon B for payment of the salary. B refuses and pays A. What claim, if any, does C have?

Answer 44

In the absence of statute, B has violated no right of C. Restatement 2d of Contracts § 321(d)

Question 45

A is employed as a teacher for the school year by X, a municipality. A, in the expectation of employment by B, another municipality, for the following school year, assigns to C the salary for the first month of service which A may render for B. A is subsequently employed by B as expected, and A’s salary for the first month becomes due. D, a creditor of A, garnishes A’s salary after it becomes due. C intervenes, claiming the funds as assignee. What claim, if any, does C have?

Answer 45

In the absence of statute, D’s claim is prior to C’s. Restatement 2d of Contracts § 321(d)

Question 46

A holds a policy of industrial insurance issued to him by the B Insurance Company. After lapse for failure to pay premiums, B refuses to pay the “cash surrender value” provided for in the policy. A and others similarly situated assign their claims to C for collection. Is this effective? On what does it depend?

Answer 46

The assignment is effective without regard to any contractual prohibition of assignment. Restatement 2d of Contracts § 322(b)

Question 47

A and B contract for the sale of land by B to A. A fully performs the contract, becomes entitled to specific performance on B’s refusal to convey the land, and then assigns his rights to C. What, if anything, is C entitled to?

Answer 47

C is entitled to specific performance against B without regard to any contractual prohibition of assignment. See Restatement of Property § 416. Restatement 2d of Contracts § 322(b)

Question 48

B contracts to transfer land to A on payment of $5000. The contract provides that A shall not assign his right. A assigns his right to C. B, on receiving $5000 from C, conveys the land to him. Is B’s duty discharged?

Answer 48

B’s duty under his contract with A is discharged. Restatement 2d of Contracts § 322(d)

Question 49

A Manufacturing Company contracts with B Insurance Company for group insurance on the lives of A’s employees. The policy and certificates issued under it to individual employees limit the class of permitted beneficiaries, permit the employee to change the beneficiary, forbid irrevocable designation of a beneficiary, and provide that the certificate is not assignable. A certificate is issued to C, a widower, who designates his son D as beneficiary and delivers the certificate to D as a gift. Later C remarries and designates his second wife E as beneficiary. On C’s death B interpleads D and E, paying the insurance money into court. What, if anything, is E entitled to?

Answer 49

E is entitled to the fund. Restatement 2d of Contracts § 322(d)

Question 50

A and C, partners, contract with B to act as exclusive distributor of B’s product in a specified territory. The terms of the contract––reading “This agreement shall bind and benefit the respective successors and assigns of the parties hereto”––show that B reposes personal trust and confidence in both A and C. A and C, without consulting with B, contract with D to act as distributor for a certain city within the territory specified by their contract with B. Can the quoted language of the term in the contract B has with A and C be applied to the contract that A and C made with D? On what does this depend?

Answer 50

A term, “This agreement shall bind and benefit the respective successors and assigns of the parties hereto,” may be read as inapplicable to an assignment by A or C which delegates performance unless B makes a further manifestation of assent. Restatement 2d of Contracts § 323(b)

Question 51

A and B enter into a contract binding A personally to do some delicate cabinet work. A assigns his rights and delegates performance of his duties to C. On being informed of this, B agrees with C in consideration of C’s promise to do the work that B will accept C’s work, if properly done, instead of the performance promised by A. Later––without cause––B refuses to allow C to proceed with the work, though C is ready to do so, and makes demand on A that A perform. A refuses. Does A have a duty? What recourse does B have? What of C?

Answer 51

C can recover damages from B and B cannot recover from A. Restatement 2d of Contracts § 323(c)

Question 52

A contracts to employ B in A’s business for one year at a specified salary. A contemplates selling the business, and the contract provides that the contract may be transferred with the business, but B is not informed of the identity of the purchaser. A month later A sells the business to C and assigns his rights and delegates his duties under the contract to C, who agrees to assume A’s duties. After the sale B works for C and is paid by C for two weeks. C then discharges B because B refuses to accept a reduction in salary. Is there a breach?

Answer 52

There is a breach of contract by A as well as C. Restatement 2d of Contracts § 323(c)

Question 53

A delivers to C the following writing addressed to B, “Pay C for his own use $100 out of the amount you owe me.” Does this constitute an assignment?

Answer 53

The writing is an assignment. Restatement 2d of Contracts § 325(a)

Question 54

A gives C, acting as A’s agent, an order to collect from B whatever B owes A. Does this constitute an assignment?

Answer 54

The order is not an assignment. Restatement 2d of Contracts § 325(a)

Question 55

A writes to B, “Please pay to C the balance due me.” Does this constitute an assignment?

Answer 55

This is insufficient to establish an assignment or to give B notice of an assignment. But the letter would be an effective assignment if delivered to C to pay or secure a debt owed by A to C. Restatement 2d of Contracts § 325(a)

Question 56

A draws and delivers to C for value either a negotiable or a non-negotiable check upon his bank, B, payable to C, for the full amount of A’s balance, or for part of it. B dishonors the check in violation of its duty to A. What, if anything, is C entitled to?

Answer 56

C has no right against B. Restatement 2d of Contracts § 325(b)

Question 57

A draws and delivers to C for value either a negotiable or a non-negotiable check upon his bank, B, payable to C, for the full amount of A’s balance, or for part of it. B accepts the check by signing a certification on its face and redelivering it to C. Is A the creditor to the amount of the check?

Answer 57

There is a novation substituting C for A as B’s creditor to the amount of the check. Restatement 2d of Contracts § 325(b)

Question 58

A draws and delivers to C for value either a negotiable or a non-negotiable check upon his bank, B, payable to C, for the full amount of A’s balance, or for part of it. A and C agree that the check will operate as an assignment. Is this effective? On what does it depend?

Answer 58

The agreement is effective as between A and C. Its effect on B is subject to the rules relating to adverse claims to bank deposits. Restatement 2d of Contracts § 325(b)

Question 59

B owes A $100. A assigns $25 to C. With knowledge of the assignment, B pays the entire debt to A. Is B’s duty discharged?

Answer 59

B’s duty to C is not discharged. See § 338. Restatement 2d of Contracts § 326(b)

Question 60

B owes A $100. A assigns $25 to C, and later assigns the entire debt to D, who pays value without notice of the assignment to C. What, if anything, is C entitled to?

Answer 60

C has the same priority as to the $25 assigned to him as if the entire debt had been assigned to him. See § 342. Restatement 2d of Contracts § 326(b)

Question 61

B owes A $100. A assigns $25 to C. B, without giving reason, refuses to pay C. Without joining A, C sues B. Is this effective? On what does it depend?

Answer 61

Neither A nor C can maintain an action against B over B’s objection unless the other is joined in the proceeding. Restatement 2d of Contracts § 326(c)

Question 62

B owes A $100. A assigns $25 to C. B pays the $75 balance to A, but refuses to pay C. Without joining A, C sues B. Is this effective? On what does it depend?

Answer 62

C can maintain an action against B for $25 without joining A. Restatement 2d of Contracts § 326(c)

Question 63

A has a contractual right against D. For consideration received from B, A assigns the right to B’s son C. C has no knowledge of the assignment. Is this effective? On what does it depend?

Answer 63

The assignment is effective immediately, subject to C’s power of disclaimer. Restatement 2d of Contracts § 327(a)

Question 64

A delivers his savings bank book to B, saying “I deliver this book to you as a gift to C.” C has no knowledge of the gift. Is this effective? On what does it depend?

Answer 64

An attempted revocation by A before C learns of the gift is ineffective. Restatement 2d of Contracts § 327(a)

Question 65

A, the payee of a negotiable or non-negotiable note or certificate of deposit, delivers it to B without indorsement as a gift to C, who has no knowledge of the delivery. Upon learning of the gift C refuses it. Who is the owner of the note or certificate?

Answer 65

A is the owner of the note or certificate. Restatement 2d of Contracts § 327(b)

Question 66

A, an oil company, has a contract to sell and deliver oil to B. A delivers to C, another oil company, a writing assigning to C “the contract” or “all A’s rights and duties under the contract.” Does C have a duty?

Answer 66

C is under a duty to B to deliver the oil called for by the contract, and A is surety for C. Restatement 2d of Contracts § 328(a)

Question 67

A, an oil company, has a contract to sell and deliver oil to B. A delivers to C, financial institution, a writing assigning to C “the contract” or “all A’s rights and duties under the contract.” Does C have a duty?

Answer 67

Delivery of the oil is not delegated to C, and C is under no duty to deliver oil. Restatement 2d of Contracts § 328(b)

Question 68

A sells and delivers an automobile to B, the price to be paid in installments, and assigns to C for value “all A’s rights under the contract.” After B has made all the payments, the automobile is discovered to have been stolen and is retaken by the owner. Is there a breach?

Answer 68

C is not liable to B for breach of warranty of title. A is. Restatement 2d of Contracts § 328(b)

Question 69

A contracts to purchase land from B. The contract provides that it is to bind the assigns of the parties. A assigns “the contract” to C, and B assigns “the contract” to D. Is there a promise by D? What about C?

Answer 69

These facts themselves do not show a promise by D. the Institute expresses no opinion as to whether they show a promise by C. Restatement 2d of Contracts § 328(c)

Question 70

A is under a contract with B to build a house for $10,000. A assigns his rights under the contract to C, who agrees to assume A’s duty to build the house. B is informed of the assignment and assumption, and makes no objection as C partly performs. Does A have a duty?

Answer 70

A remains bound to B as surety for C’s performance. Restatement 2d of Contracts § 329(b)

Question 71

A is under a contract with B to build a house for $10,000. A assigns his rights under the contract to C, who agrees to assume A’s duty to build the house. B is informed of the assignment and assumption, and makes no objection as C partly performs. A withdraws from the construction business and informs B that he takes no further responsibility for C’s performance. B makes no objection and C proceeds with the work. Does A have a duty?

Answer 71

A is discharged. Restatement 2d of Contracts § 329(b)

Question 72

A is under a contract with B to build a house for $10,000. A assigns his rights under the contract to C, who agrees to assume A’s duty to build the house. B is informed of the assignment and assumption, and makes no objection as C partly performs. A withdraws from the construction business and informs B that he takes no further responsibility for C’s performance. On being informed of A’s repudiation, B notifies A or C that further performance is “without prejudice.” Does A have a duty?

Answer 72

A is not discharged. Restatement 2d of Contracts § 329(c)

Question 73

A holds a promissory note made by B and secured by a mortgage on Blackacre. A enters into a written agreement with C which recites that A has sold the note and mortgage to C for a price payable in installments and that A is to hold the note and mortgage as security for the price and to indorse the note and execute an assignment of the mortgage when the price is paid. Does this constitute an assignment?

Answer 73

There is a present assignment to C, subject to the security interest retained by A. Restatement 2d of Contracts § 330(a)

Question 74

A sells property to B and authorizes B to pay the price to X, a bank, on A’s behalf. Later A borrows money from C and agrees to repay C out of the money received from B. A then instructs X to hold for the account of A and C all sums received from B, stating “C does not claim this money as owner, but you are to hold it until you have been advised in writing by both parties.” Does this constitute an assignment?

Answer 74

There is no assignment to C. Restatement 2d of Contracts § 330(b)

Question 75

A, the holder of a note payable by B, delivers it to C, A’s attorney, for collection, agreeing that C is co-owner of the claim to the extent of half of what he collects. Does this constitute an assignment?

Answer 75

C is a partial assignee of the right against B. Restatement 2d of Contracts § 330(b)

Question 76

A, a real estate broker, is employed by B to find a purchaser for B’s land. In consideration of C’s help in finding a purchaser, A promises to pay C one-half of the commission earned. The land is sold and the commission earned. What claim, if any, does C have?

Answer 76

C has no right against B. Restatement 2d of Contracts § 330(c)

Question 77

As part of a property settlement in divorce proceedings A contracts with his wife C to make an irrevocable change in the beneficiary of a policy of insurance on A’s life to D, their minor child. A fails to do so and later gratuitously makes his second wife E the beneficiary of the policy. On A’s death B, the insurance company, pays the amount of the policy into court and interpleads C, D and E. What, if anything, is D entitled to?

Answer 77

D is entitled to the money. Restatement 2d of Contracts § 330(c)

Question 78

A “assigns” to C as security for a loan “all the book debts due and owing or which may during the continuance of this security become due and owing” to A. B subsequently becomes indebted to A on a contract made after the “assignment,” and thereafter a creditor of A garnishes the debt. What, if anything, is C entitled to?

Answer 78

In the absence of a statute, C is entitled to the debt to the exclusion of the creditor. Restatement 2d of Contracts § 330(d)

Question 79

A “assigns” to C as security for a loan “all the book debts due and owing or which may during the continuance of this security become due and owing” to A. B subsequently becomes indebted to A on a contract made after the “assignment,” and A assigns the debt to D. D takes the assignment in good faith as a purchaser for value, without notice of the “assignment” to C. What, if anything, is D entitled to?

Answer 79

In the absence of statute, D is entitled to the debt to the exclusion of C. Restatement 2d of Contracts § 330(d)

Question 80

A has a right to $400 against B and assigns the right to C in payment for an automobile on condition that the car run 1,000 miles without needing repairs. Is this effective? On what does it depend?

Answer 80

The assignment is conditional and is effective according to its terms. If the car does not run 1,000 miles without needing repairs, the right to the $400 belongs to A, not to C. Restatement 2d of Contracts § 331(b)

Question 81

B owes A four million dollars. A signs, seals and delivers to C a deed of gift of the debt to the extent of one million dollars. Does this constitute an assignment?

Answer 81

There is an effective and irrevocable assignment. Restatement 2d of Contracts § 332(b)

Question 82

B owes A $70,000 represented by a promissory note payable to the order of A in installments. A signs and delivers to C, his sister, a written instrument not under seal reciting that in consideration of love and affection for C A gives and assigns to C fifty per cent of the note, reserving all installments due or paid during A’s life. The note is retained in A’s possession. Is this gift effective? If so, is it revocable?

Answer 82

The gift is effective and irrevocable. Restatement 2d of Contracts § 332(b)

Question 83

A has a savings account in the B bank which is represented by a passbook. While in the hospital and about to undergo a serious operation, A signs the following note and gives it to a nurse for her husband C: “Dear Papa, the bank book is in my letter box in the kitchen. It is yours. Look out for yourself. My will is in the lawyer’s office. Your loving wife.” A dies before C takes possession of the passbook. Is this gift effective? If so, is it revocable?

Answer 83

There is no effective gift. Restatement 2d of Contracts § 332(b)

Question 84

A gratuitously delivers to B a savings bank book, a non-negotiable promissory note, a life insurance policy and a registered bond with the expressed intent of making B the owner of the rights of which these documents are evidence. Does this constitute an assignment? If so, is it effective and/or revocable?

Answer 84

The delivery operates as an effective and irrevocable assignment of both the rights and the documents. Restatement 2d of Contracts § 332(c)

Question 85

A makes a written contract with B to convey land to B for $25,000. Later A gratuitously delivers to C the written contract, signed by B, with the expressed intent of making C the owner of the right to the purchase money. Is this gift effective? If so, is it revocable?

Answer 85

The gift is effective and irrevocable. Restatement 2d of Contracts § 332(d)

Question 86

A deposits a draft with B bank for collection and is given a receipt signed by B which describes the draft and recites that it is “received from A for collection.” A writes on the receipt, “Pay this to C,” signs his name, and delivers the receipt to C with the expressed intent of making a gift to C of the proceeds of the draft. Is this gift effective? If so, is it revocable?

Answer 86

The gift is effective and irrevocable. Restatement 2d of Contracts § 332(d)

Question 87

A has a checking account in B bank and delivers the bank pass book to C with the expressed intent of making a gift to C of the balance in the account. Is this gift revocable?

Answer 87

The gift is revocable in view of the customary practice of making withdrawals without notation in the pass book, even though A has in fact made no such withdrawals. Restatement 2d of Contracts § 332(d)

Question 88

A deposits various sums of money with B, and keeps a list of the amounts on a sheet of paper. A delivers the list, bearing a total and a date but no signature or other writing, to C with the expressed intent of making a gift to C of the amount due. Is this gift revocable?

Answer 88

The gift is revocable. Restatement 2d of Contracts § 332(d)

Question 89

A draws a check on his account in B bank payable to the order of C and delivers it to C with the expressed intent of making a gift to C of part of the account. C negotiates the check to D for value, or obtains payment from B. Meanwhile A dies. What, if anything, is C entitled to? What about A’s personal representative?

Answer 89

C can retain what he received before the death, but A’s personal representative can recover what C received thereafter. Restatement 2d of Contracts § 332(f)

Question 90

A has a right against B and assigns it for value to C. Thereafter A gives B a release. What, if anything, is C entitled to? Why?

Answer 90

C can recover damages from A for any harm this causes C. The amount of harm may be greater if B is released for value before he receives notification of the assignment than if B remains liable to C. Restatement 2d of Contracts § 333(a)

Question 91

A has a right against B, performance of which B has repudiated without excuse. A assigns his right to C for value without disclosing B’s repudiation. What, if anything, is C entitled to?

Answer 91

C can recover from A damages for any harm the repudiation causes C. Restatement 2d of Contracts § 333(a)

Question 92

A reasonably and in good faith believes he has a right against B, and assigns it to C for value as an actual right. In fact the right does not exist. What, if anything, is C entitled to?

Answer 92

C can recover damages from A. Restatement 2d of Contracts § 333(a)

Question 93

A believes that there is only a slight possibility that he may have a right against B. A assigns to C for value “Any claim or right” which he may have against B without disclosing how seriously he doubts the validity of the claim. Does A have a duty?

Answer 93

A is under no duty to C if the claim is invalid. Restatement 2d of Contracts § 333(b)

Question 94

B contracts to sell A specified goods for a stated price. A effectively assigns his right to C. What, if anything, is C entitled to?

Answer 94

On tender of the agreed price, C has a right to take delivery of the goods at the agreed time and place. Restatement 2d of Contracts § 334(b)

Question 95

B contracts to sell and deliver 100 gallons of fuel oil to A at A’s house. C lives next door to A and has equal facility for receiving delivery of oil. A assigns his right under the contract to C and directs B to deliver the oil at C’s house. Does B have a duty?

Answer 95

B is under a duty to do so. The change in the required performance is too slight to give B a valid objection. Restatement 2d of Contracts § 334(b)

Question 96

B contracts with A to furnish A’s family with all the oil it shall need for the ensuing year at a fixed price. A assigns his rights under the contract to C. What recourse does C have?

Answer 96

C can acquire no right against B that C’s family shall be supplied with oil, but may acquire a right that A’s family shall be supplied, if such is the intention of the parties. Restatement 2d of Contracts § 334(b)

Question 97

B contracts with A to serve A as a valet. A, for value, assigns his rights under the contract to C. C acquires no right to have B act as valet to C. What, if anything, is C entitled to? On what will this depend?

Answer 97

If the assignment manifests an intent to give C a right to have B act as valet to A, C acquires such a right. Restatement 2d of Contracts § 334(b)

Question 98

B, a silver mining company, contracts with A, a smelting company, to deliver B’s ore to A for smelting. A contracts to smelt the ore and to deliver the metal thereby obtained to B, receiving an agreed price for the work. A’s right to receive the ore is assigned for value by him to C. A remains financially responsible but ceases to operate a smelter. Is the assignment effective? What right, if any, does C have? Why?

Answer 98

The assignment is ineffective. The contract to deliver valuable ore to the assignor involves a degree of personal confidence which precludes the substitution of an assignee to receive the ore. C, therefore, has no right to have the ore delivered to himself, and as A has ceased to carry on the smelting business, C has no right to require B to deliver the ore to A. Restatement 2d of Contracts § 334(c)

Question 99

B contracts to sell to A, an ice cream manufacturer, the amount of ice A may need in his business for the ensuing three years, to the extent of not more than 250 tons a week, at a stated price a ton. A makes a corresponding promise to B to buy such an amount of ice. A sells his ice cream plant to C and assigns to C all A’s rights under the contract with B. Whether the assignment is effective depends on the terms of the contract between A and B and on the likelihood that C’s requirements will be different from A’s. Is the contract effective? On what does it depend?

Answer 99

If the contract is read as a contract to furnish such ice as the plant requires, B is bound to furnish C ice up to the agreed maximum even though C requires more or less ice than B would have required. Restatement 2d of Contracts § 334(c)

Question 100

B contracts to build a wall on A’s land at a place to be selected by A personally. A sells the land and assigns his rights under the contract to C and joins C in selecting the place. Is this binding?

Answer 100

B is bound to build the wall. Restatement 2d of Contracts § 334(c)

Question 101

A holds B’s unsealed written promise, unenforceable because given without consideration. A assigns this to C, who pays value on the faith of the writing, with reasonable belief that A had given B consideration and that the promise is legally binding. What claim, if any, does C have against B?

Answer 101

C has no right against B. Restatement 2d of Contracts § 336(b)

Question 102

A has a right against B that is voidable because it was created when B was an infant. A assigns his right to C, who is ignorant of the facts making the right voidable. Is C’s right against B voidable?

Answer 102

C’s right against B is voidable. Restatement 2d of Contracts § 336(b)

Question 103

A lends money to B. Be never repays the loan, and the Statute of Limitations lapses on A’s right. Unaware of this, A assigns his right to C. Does C have a right?

Answer 103

C’s right is barred by the Statute of Limitations when A’s right would have been. Restatement 2d of Contracts § 336(b)

Question 104

A, who is not C’s agent, fraudulently induces B to buy lumber from C. C does not know of the fraud and acts in good faith. C later assigns his rights under the contract to D, who knows of the fraud but was not a party to it. Can B avoid the contract?

Answer 104

B cannot avoid the contract against D. Restatement 2d of Contracts § 336(b)

Question 105

A lends money to B, who regularly sells goods to A on credit and expects to repay the loan by making such sales. A assigns his right to C. Thereafter B sells goods to A as expected, and the price becomes due before B receives notification of the assignment. What claim, if any, does B have against C?

Answer 105

Unless a statute provides otherwise, B can set off his claim for the price in an action by C as assignee. Restatement 2d of Contracts § 336(c)

Question 106

A contracts to market goods for B in return for payment to be made by B. A then assigns his right to payment to C, and B receives notification of the assignment. Subsequently A becomes insolvent and wholly fails to perform the contract. Can this be used as a defense by B?

Answer 106

B has a defense against C. Restatement 2d of Contracts § 336(d)

Question 107

A contracts to build a structure for B, and becomes entitled to progress payments. A assigns the money due to C, and B receives notification of the assignment. Thereafter, in breach of his contract, A abandons the work. What, if anything, is B entitled to?

Answer 107

In an action by C against B, B is entitled to recoup damages caused by A’s breach. Restatement 2d of Contracts § 336(d)

Question 108

B owes A $100. A assigns the right to C, and C assigns it to D. C owes B $50. How could the debt owed be set off?

Answer 108

Unless a statute provides otherwise, B can set off against D the debt owed by C only if it becomes due before B receives notification of the assignment by C. Restatement 2d of Contracts § 336(e)

Question 109

B, doing business under the name A, executes a purported contract with A reciting the delivery of goods by A to B and B’s promise to pay A for them. B then executes on behalf of A an assignment to C of A’s rights under the contract and delivers it to C for consideration. Is this binding in favor of C?

Answer 109

Whether or not C knows the facts, B’s purported promise is binding in favor of C. Restatement 2d of Contracts § 336(f)

Question 110

A sells and delivers goods to B, and B agrees that in the event of an assignment to C, B will pay the price to C without asserting any defense or claim based on breach of warranty by A. A assigns his rights under the contract to C, who takes in good faith and without notice of any defense or claim. Can either the defense or claim be asserted by B against C?

Answer 110

In the absence of statute or administrative rule, B is barred from asserting against C a defense or claim based on breach of warranty by A. Restatement 2d of Contracts § 336(f)

Question 111

A contracts to sell goods to B, and B agrees that in the event of an assignment to C B will pay the price to C without asserting any defense or claim that B has against A. A assigns his rights under the contract to C and absconds without delivering any goods to B. Does B have a defense against C?

Answer 111

In the absence of statute, administrative rule, or of facts giving rise to an estoppel, B has a defense against C. Restatement 2d of Contracts § 336(f)

Question 112

A contracts to do construction work for B, a subcontractor, and becomes entitled to progress payments. A assigns the progress payments to C, who advances money to A in reliance on B’s assertion to C that the work has been done and that the payments will be made when received from the general contractor. C later sues B for the payments. Can B be estopped? On what will this depend?

Answer 112

In an action by C for the payments, B is estopped to offset B’s claim against A for A’s defaults subsequent to the assignment. Restatement 2d of Contracts § 336(g)

Question 113

A contracts to sell furniture to B for a price payable in installments. A assigns his rights under the contract to C, who buys the rights and pays for them in reliance on B’s written statement addressed to C that the furniture has been received and accepted by B. C later sues B for the balance due on the price. Can B be estopped? On what will this depend?

Answer 113

In an action by C for the balance due on the price, B is estopped to assert that no furniture had been received. But there is no such estoppel if at the time of the assignment C has reason to know that A has made a practice of obtaining false statements of receipt and acceptance. Restatement 2d of Contracts § 336(g)

Question 114

In May A contracts to deliver described goods to B on credit in October. In June A assigns his rights and delegates his duties under the contract to C. With knowledge of the assignment B accepts the goods from C in October, making no claim of an offset. Is B estopped to assert against C claims for prior defective deliveries by A?

Answer 114

B is estopped to assert against C claims for prior defective deliveries by A. Restatement 2d of Contracts § 336(g)

Question 115

A is fraudulently induced by B, the agent of C, to sell goods to C. C assigns his rights to D, who pays value in good faith and without notice. D assigns to E, who knows of the fraud. How might this contract be or not be avoidable for A?

Answer 115

A cannot avoid the contract as against E, who succeeded to D’s rights. But if E assigns to C, A’s power of avoidance will revive. Restatement 2d of Contracts § 336(h)

Question 116

A has a right against B, voidable for A’s fraud. A assigns the right to C. Thereafter B learns of the fraud but does not within a reasonable time notify either A or C of his intention to avoid the transaction. Is C’s right voidable?

Answer 116

Whether or not B knows of the assignment, C’s right ceases to be voidable. Restatement 2d of Contracts § 337(a)

Question 117

A has a right against B, unenforceable because of non-compliance with the Statute of Frauds. A assigns the right to C. Thereafter B makes a memorandum sufficient to satisfy the Statute. Is C’s right enforceable?

Answer 117

Whether or not B knows of the assignment, C’s right is enforceable. Restatement 2d of Contracts § 337(a)

Question 118

A is the payee of B’s negotiable note for $200. A indorses and delivers the note to C. After maturity, without knowledge of C’s rights, B pays A $50 on account of the note. Is this effective? On what does it depend?

Answer 118

The part payment is not effective to extend the period of the statute of limitations in favor of C. If the part payment were made before assignment, the period would be so extended. Restatement 2d of Contracts § 337(b)

Question 119

B owes A $100. A assigns the right to C. C gives B a gratuitous release under seal and subsequently assigns the right to D for value. What, if anything, is D entitled to?

Answer 119

D acquires no right against B. Restatement 2d of Contracts § 338(a)

Question 120

B owes A $100. A assigns the right to C. C assigns it to D, and D assigns it to E. Before receiving notification of the assignment to E, B pays D. Is B discharged?

Answer 120

B is discharged. Restatement 2d of Contracts § 338(b)

Question 121

B owes A $100. A assigns the right for value to C and subsequently by way of oral gift to D. Before receiving notification of the assignment to C, B pays D. Is B discharged?

Answer 121

B is discharged. Restatement 2d of Contracts § 338(b)

Question 122

A assigns to C a debt owed by B. Pursuant to Uniform Commercial Code §§ 9-401 and 9-402, C files a financing statement describing the collateral as “debt owed by B.” Without knowledge of the filing and without any other reason to know of the assignment, B pays A. Is B discharged?

Answer 122

B is discharged. Restatement 2d of Contracts § 338(e)

Question 123

A contracts to do construction work for B, and assigns to C the payments to become due. C notifies B of the assignment. A becomes financially unable to perform, and B makes advance payments to A which are necessary to enable A to perform. Does B have a duty?

Answer 123

B is liable to C only for the balance due after deducting the amount of the advances. Restatement 2d of Contracts § 338(f)

Question 124

A Company contracts to supply electricity to B for twenty years. Later A assigns to C for value certain fixed monthly payments to be made by B under the contract. After ten years B ceases to require electricity and A and B agree in good faith to terminate all performance under the contract. Does B have a duty?

Answer 124

B is not liable to C for payments which would have accrued thereafter. Restatement 2d of Contracts § 338(f)

Question 125

B owes A $100. A makes a revocable gratuitous assignment to C, and subsequently makes a similar assignment to D. B with knowledge of the facts pays C. Is B discharged?

Answer 125

B is not discharged. The assignment to D gives B reason to know that A intends to revoke the assignment to C. Restatement 2d of Contracts § 338(g)

Question 126

B owes A $100. A is induced by C’s fraud to assign the right to C. B in good faith and without notice of the fraud enters into a novation with C in satisfaction of the debt. Is B’s duty discharged to C or A?

Answer 126

B’s duty under the original contract is discharged. But if C holds a substituted right under the novation in constructive trust for A, performance by B with reason to know the facts does not discharge his duty to A. Restatement 2d of Contracts § 338(g)

Question 127

A, as trustee for X, has a right against B. A, in violation of his trust, assigns his right to C gratuitously. B pays C with reason to know of A’s breach of trust. Is B’s duty discharged?

Answer 127

B’s duty to X is not discharged. Restatement 2d of Contracts § 338(g)

Question 128

A gives or sells to C a savings bank book on the B bank and delivers the book to C. C gives or sells the book to D, but D allows C to retain or resume possession of it. The B bank pays C in good faith and before receipt of notification of the assignment from C to D. Is B’s debt discharged?

Answer 128

B’s debt is discharged. Restatement 2d of Contracts § 338(h)

Question 129

A gives or sells to C a savings bank book on the B bank and delivers the book to C. C gives or sells the book to D, but D allows C to retain or resume possession of it. The B bank pays A in good faith and before notification of any assignment. Is B’s debt discharged?

Answer 129

B’s debt is not discharged. Restatement 2d of Contracts § 338(h)

Question 130

A gives or sells to C a savings bank book on the B bank and delivers the book to C. C gives or sells the book to D, but D allows C to retain or resume possession of it. The B bank pays C in good faith and before receipt of notification of the assignment from C to D, C without surrender or cancellation of or notation in the book. Subsequently C sells and delivers the book to E, a bona fide purchaser for value. To whom does B owe the debt?

Answer 130

B owes the debt to E. Restatement 2d of Contracts § 338(h)

Question 131

B owes A $100. A executes and delivers a written assignment of the debt to C, but a separate written agreement provides that the assignment shall only take effect if C renders a specified service. C does not render the service, but presents the assignment to B, who pays C in good faith. Can A be estopped? On what will this depend?

Answer 131

A is estopped to deny the effectiveness of the assignment to support discharge of B, though A may recover the payment from C. Restatement 2d of Contracts § 338(h)

Question 132

A assigns to C a debt owed A by B, and C notifies B of the assignment. B requests C to furnish reasonable proof of the assignment, but C fails to do so. After a reasonable time B pays A. Is B’s duty discharged?

Answer 132

B’s duty to C is discharged. Restatement 2d of Contracts § 339(b)

Question 133

A deposits money in the B bank and later assigns the deposit to C. C notifies B of the assignment, but does not serve B with process or supply B with indemnity or deliver to B an instrument of assignment signed by A. After nine days B pays A. Is B’s duty discharged?

Answer 133

In the absence of statute B is discharged from liability to C only if nine days is found to be a reasonable time. Restatement 2d of Contracts § 339(c)

Question 134

A deposits money in the B bank and orally assigns the deposit to C. C applies for an injunction against payment by B to A. A denies making the assignment. Should the injunction be granted? On what with this depend?

Answer 134

The injunction should be granted only if C gives security to protect both A and B. Restatement 2d of Contracts § 339(c)

Question 135

A deposits money with B and later makes an irrevocable gratuitous assignment of the deposit to C, who gives notice to B. X notifies B that A held the money as X’s agent. If sued by either C or X, what can B do to possibly protect himself?

Answer 135

If sued by either C or X, B can protect himself by notifying the other to take over the defense. If the other unreasonably refuses to do so, and judgment is rendered against B, the other is barred by the judgment from making further claim against B. Furthermore, the circumstances are such that the other claimant is not subject to the jurisdiction of the court and cannot be barred by a judgment against B from making further claim against B. Such a judgment will be denied or its enforcement restrained unless the plaintiff gives security to protect B against the outstanding claim. Restatement 2d of Contracts § 339(d)

Question 136

A is drilling a well for B under contract. C notifies B that A has assigned to C his rights under the contract. X, claiming that A is indebted to X, serves B with garnishment process in an action against A. B files an answer alleging the assignment, and promptly notifies A and C of the proceedings. C then sues B in an adjoining state. Whose action takes priority: C or X?

Answer 136

C’s action will be stayed until X’s action is determined. Restatement 2d of Contracts § 339(d)

Question 137

By the Bankruptcy Reform Act of 1978, the wages of employees in certain cases are given priority of payment over most other provable claims. A, an employee of B of the class entitled to priority, effectively assigns his wages to C either before or after B’s bankruptcy. What, if anything, is C entitled to?

Answer 137

C is entitled to priority of payment from B’s estate. Restatement 2d of Contracts § 340(a)

Question 138

A is entitled to receive $1000 from B, and as security for the right has a certificate for 25 shares of the X railroad, indorsed by B in blank. A effectively assigns his right to C, who is ignorant of the existence of the security. What, if anything, is C entitled to?

Answer 138

C is entitled to the shares as security. Restatement 2d of Contracts § 340(b)

Question 139

A holds a bond issued by B, secured by collateral held by X as trustee for the benefit of the bondholders. X wrongfully fails to preserve the collateral. Later A sells the bond to C, who does not know of the wrong. When the wrong is discovered, B is insolvent. What, if anything, is C entitled to?

Answer 139

C is entitled to A’s claim against X. Restatement 2d of Contracts § 340(b)

Question 140

A is entitled to receive $1000 from B, and as security for the right has a certificate for 25 shares of the X railroad, indorsed by B in blank. A effectively assigns his right to C, who is ignorant of the existence of the security. A and C agree that the pledge of shares is not to be transferred to C. What, if anything, is B entitled to?

Answer 140

B is entitled to return of the shares. Restatement 2d of Contracts § 340(c)

Question 141

A is entitled to receive $1000 from B, and as security for the right has a certificate for 25 shares of the X railroad, indorsed by B in blank. A effectively assigns his right to C, who is ignorant of the existence of the security. A sells and delivers the share certificate to D, a bona fide purchaser. D acquires it free of any adverse claim. What are the rights and/or claims of each party?

Answer 141

C’s right against B is subject to the offset of B’s claim for damages against A for conversion. Uniform Commercial Code §§ 8-302, 9-309. Restatement 2d of Contracts § 340(d)

Question 142

A has a right to receive $1,000 from B for money lent, secured by a pledge of B’s savings bank book on the X bank, with an unconditional written assignment of the bank account to A signed by B. A sells and assigns 25 per cent of the right to C for value, but retains possession of the savings bank book and the assignment by B. Later A sells the savings bank account to D, who takes possession of the book as a bona fide purchaser for value. What are the rights and/or claims of each party?

Answer 142

D’s right is prior to C’s under § 342, and B is estopped to redeem from D. C’s right against B is subject to the offset of B’s claim for damages against A. Restatement 2d of Contracts § 340(d)

Question 143

A has a right against B and assigns it to C for value. X, a creditor of A, serves garnishment process on B in an action against A, and obtains judgment against B before B receives notification of the assignment. A month later, before any payment or satisfaction or issue of execution and within the time specified in local procedural rules, B and C move to reopen the judgment. Should the motion be granted? On what with this depend?

Answer 143

The motion should be granted, and C is entitled to judgment against B to the exclusion of X. Restatement 2d of Contracts § 341(c)

Question 144

A has a right to the payment of $100 by B, and orally assigns it to C by way of gift. Subsequently A assigns the right to D, who gives value but knows of the assignment to C. Is B required to pay D? On what with this depend?

Answer 144

Unless B has paid C without notice of D’s assignment, B must pay D. Restatement 2d of Contracts § 342(d)

Question 145

B owes A $100. A is an infant in a state where an infant may avoid his contract without restoring any consideration received. A assigns his right to C for value. Subsequently, on becoming of age, A assigns his right to D, who gives value but knows of the assignment to C. Is B required to pay C? On what with this depend?

Answer 145

Unless B has paid C without notice of D’s assignment, B must pay D. Restatement 2d of Contracts § 342(d)

Question 146

B owes $100 to A. A assigns the right to C for value. Later A assigns it for value to D, who takes it in good faith. D notifies B of the assignment to him before C notifies B of his assignment. Whose right is superior: C or D? On what with this depend?

Answer 146

C’s right is superior to D’s. But if D, still without knowledge or reason to know of the assignment to C, receives $50 from B, D can retain what he receives. Restatement 2d of Contracts § 342(e)

Question 147

A, the holder of a savings bank book which records a deposit of $100 in the B savings bank, assigns the deposit to C for value without delivering the book. A then delivers the book to D, who pays value therefore in ignorance of the assignment to C. What, if anything, is D entitled to?

Answer 147

D is entitled to the deposit. Restatement 2d of Contracts § 342(f)

Question 148

A holds a life insurance policy issued by the B insurance company. By written assignment A assigns the policy to C as security for a debt, but does not deliver the policy. Later A assigns the policy to D as security for a loan of $3,000, and delivers the policy to D. Still later D lends an additional $1,000 to A on A’s note, relying in good faith on a notation added to the note without A’s authority that the note is secured by the policy. What, if anything, is C entitled to?

Answer 148

C is entitled to redeem the policy from D on payment of $3,000. Restatement 2d of Contracts § 342(f)

Question 149

A, as trustee for X, has a right against B. In violation of his trust A assigns the right gratuitously to C. C assigns to D, a purchaser for value in good faith and without notice of the breach of trust. What right, if any, does D have?

Answer 149

D holds the right free of the trust. Restatement 2d of Contracts § 343(a)

Question 150

A has a right against B and is induced to assign it to C by C’s fraud. C assigns it to D, a purchaser for value in good faith and without notice of the fraud. What recourse does D have?

Answer 150

Even after discovering the fraud, D can enforce the right against B and retain the proceeds free of A’s claim. Restatement 2d of Contracts § 343(a)