Chapter 17 Book set

Question 1

Retail LLC contracts with Paving Inc. to grade and pave a parking lot. The contract provides that it cannot be assigned without Retail’s consent. Later, Paving assigns the contract to Roadwork Company without obtaining Retail’s consent. Retail could most successfully argue that the contract cannot be assigned because

Answer 1

the contract prohibits assignment.

Question 2

Ira owes Jess $1,000. Kerr owes Ira $1,000. Ira unconditionally assigns to Jess the right to Kerr’s payment. Jess’s right to the $1,000 is subject to the defenses that

Answer 2

Kerr had against Ira

Question 3

As a general rule, any duty can be delegated.

Answer 3

True

Question 4

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

Answer 4

False

Question 5

In most states, the assignment of ownership rights in real estate cannot be prohibited because that would be contrary to public policy.

Answer 5

True

Question 6

A bank’s sale of its right to receive payment on a loan to a third party is a transfer but not an assignment.

Answer 6

False

Question 7

In a contract for a sale of goods, the right to receive payment on an account may be assigned unless the sales contract prohibits such an assignment.

Answer 7

False

Question 8

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.

Answer 8

False

Question 9

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

Answer 9

True

Question 10

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

Answer 10

True

Question 11

Under an assignment of “all rights” on a contract, the assignor is absolved from any liability for performance under the contract.

Answer 11

False

Question 12

An insurance policy cannot be assigned if the assignment will significantly alter the risks to, or the duties of, the insurer.

Answer 12

True

Question 13

Personal services are unique to the person rendering them, but the right to receive those services is not and can therefore be assigned.

Answer 13

False

Question 14

On an assignment to a loan broker by an auto dealer of the payments due on an auto loan, the broker obtains only those rights that the dealer originally had.

Answer 14

True

Question 15

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.

Answer 15

False

Question 16

On a delegation of contract duties, the delegator is absolved from any liability for performance under the contract.

Answer 16

False

Question 17

An obligee can legally refuse performance from a delegatee only if the duty delegated is one that cannot be delegated.

Answer 17

True

Question 18

Beau borrows $15,000 from Credit Center to buy a car. The lender assigns the right to receive the loan payments to Debt Collections Inc. If Beau does not pay the debt, the assignee can

Answer 18

enforce the payment in court.

Question 19

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

Answer 19

if all that remains on the deal is a payment of money.

Question 20

When the original parties to a contract agree that its performance should directly benefit a third party, that party can sue the promisor directly for breach.

Answer 20

True

Question 21

Until the obligor has notice of assignment, the obligor can discharge his or her obligation by performance to any party.

Answer 21

False

Question 22

If a statute expressly prohibits assignment, the particular right in question cannot be assigned.

Answer 22

True

Question 23

An investor cannot effectively object to the delegation of the selection of his or her investments under a contract with one financial advisor to another.

Answer 23

False

Question 24

In a state in which a statute prohibits an employee from assigning the right to receive workers’ compensation benefits, the employee can assign the right

Answer 24

under no circumstances

Question 25

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

Answer 25

extinguished

Question 26

An accountant can delegate his or her contractual duty to another accountant, even if the contract expressly prohibits it, because accounting is a delegable skill.

Answer 26

False

Question 27

After a transfer to a creditor by an investor of a right to receive payments on a business loan, the creditor can demand those payments from the borrower.

Answer 27

True

Question 28

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

Answer 28

False

Question 29

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.

Answer 29

True

Question 30

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

Answer 30

an assignment

Question 31

If a contract stipulates that it cannot be assigned, then it cannot be assigned unless the assignment

Answer 31

involves ownership rights in real estate.

Question 32

The rights under an insurance policy can normally be assigned

Answer 32

if the assignment involves only a payment of benefits

Question 33

Privity of contract establishes the basic principle that contracting parties have a right to privacy in the information expressed in their contracts.

Answer 33

False

Question 34

A transfer of contract rights to a third party is an incidental benefit.

Answer 34

False

Question 35

If it were not possible to assign contract rights, many businesses could not continue to operate.

Answer 35

True

Question 36

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

Answer 36

enforce the payment in court.

Question 37

An incidental third party beneficiary cannot sue to enforce the contract because the benefit is unintentional.

Answer 37

True

Question 38

Lau enters into a contract to mow Macy’s yard every week for the summer. Macy sells her house and yard to Nona, and assigns the right to receive Lau’s services to Nora. Macy is

Answer 38

the assignor.

Question 39

The unconditional assignment of rights under a contract extinguishes any defenses that the obligor had against the assignor.

Answer 39

False

Question 40

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

Answer 40

False

Question 41

Steel Mill Inc. and Transport Delivery LLC enter into a contract. UniOil Corporation will indirectly benefit from the deal. Under the principle of privity, UniOil has the right to

Answer 41

none of the choices
* sue Steel Mill for breach
* require Transport to perform
* demand performance from both original parties

Question 42

Laminate LLC agrees to buy factory equipment from Metalwork Company on the seller’s misrepresentation that it meets certain specifications. Metalwork assigns the right to payment on the deal to Nations Credit Corporation. When the buyer discovers the fraud, the firm returns the equipment and cancels their contract. Laminate

Answer 42

need not pay any of the contract price to Nations Credit.

Question 43

Expressly designating a third party as a beneficiary in a contract indicates that the beneficiary is intended.

Answer 43

True

Question 44

A debt collector who is delegated the right to payments on a student loan owes no obligation to the debtor arising under the original terms of the loan.

Answer 44

False

Question 45

Beck and Call enter into a contract under which Beck agrees to cater Call’s wedding. The contract expressly prohibits any transfer of rights without the assignee’s consent. Call may transfer the right to receive Beck’s services to Dion

Answer 45

if Beck consents

Question 46

The assignment of the same contract right to two different persons creates parallel and equal rights and obligations.

Answer 46

False

Question 47

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

Answer 47

True

Question 48

A third party’s right to control the details of performance of a contract indicates that the third party is an intended beneficiary.

Answer 48

True

Question 49

Marlo and Nita enter into a contract for the sale of Marlo’s apartment for which Nita agrees to pay $250,000. Nita assigns her right to buy the apartment to Owen. Owen is

Answer 49

the assignee

Question 50

When the performance of a contract depends on the personal skill of the obligor, a delegation of the duty is prohibited.

Answer 50

True