Third Party Beneficiaries; Assignments

Question 1

May a contract to manufacture limited edition plates be delegated to a third party?

Answer 1

Yes, because all contractual duties can be delegated unless they fall within a recognized exception.

Question 2

An actors contract with his agent CANNOT be assigned because

Answer 2

because it is a personal services contract that involves unique services.

Question 3

The general rule is that when the assignor makes two assignments of the same right, if the first assignment is ____________, the ____________ assignee has priority.

Answer 3

irrevocable; first

Question 4

The rights of a third-party beneficiary vest when he:

Answer 4

Manifests assent to the promise; brings suit to enforce the promise; or materially changes position in justifiable reliance on the promise

Question 5

Once the third-party beneficiary’s rights have vested, the promisor and promisee cannot

Answer 5

vary his rights without consent.

Question 6

In determining the promisee’s intentions in a third-party beneficiary situation, courts will consider

Answer 6

1) Whether the third party is expressly designated in the contract; 2) Whether performance is to be made directly to the third party; 3) Whether the third party has any rights under the contract; and 4) Whether the third party stands in such a relationship to the promisee that one could infer that the promisee wished to make an agreement for the third party’s benefit.

Question 7

If an assignee discovers that the assignor had previously assigned the same contract rights to another party for value, the assignee may sue the assignor for breach of warranty only if:

Answer 7

the assignee’s assignment was for value.

Question 8

The warranty that the assignor has the right to assign, like other assignment warranties,

Answer 8

is implied.

Question 9

In a sale of goods, a good faith purchaser for value __________.

Answer 9

can be a holder of security interest in the goods.

Question 10

A writing is __________.

Answer 10

Usually not required for effective assignment.

Question 11

An intended beneficiary must be __________.

Answer 11

identifiable at the time performance is due.

Question 12

Exceptions to the general rule that all duties may be delegated are:

Answer 12

1) Duties involving personal judgment and skill; 2) Duties in which a special trust has been placed in the delegator; 3) Duties for which delegation will materially change the obligee’s expectancy; and 4) Duties the delegation of which is restricted in the contract.

Question 13

What best describes the elements required for an effective assignment?

Answer 13

An adequate description of the right being assigned and present words of assignment

Question 14

An assignment for value is

Answer 14

irrevocable

Question 15

When an owner of goods entrusts those goods to a merchant who deals in goods of that kind, the merchant has the power to transfer all of the owner’s rights in the goods to __________.

Answer 15

Buyer in the ordinary course of business.

Question 16

Once an obligor delegates his duties under a contract to a delegate, the obligee __________.

Answer 16

Must look first to the delegate for performance of the duties, but if he fails to perform, then may look to the delegator as a surety for the delegate’s performance

Question 17

Regarding orders of liability, an obligor who delegates his duties __________.

Answer 17

Remains secondarily liable on the contract, even if the delegate expressly assumes the obligor’s duties under the contract

Question 18

An assignment is for value even if it is:

Answer 18

taken as payment of a pre-existing debt.

Question 19

Assignments given as a gift are gratuitous and are subject to

Answer 19

the revocability rules for gratuitous assignments.

Question 20

In every assignment for value, the assignor implied warrants that: he has a right to make the assignment; the right exists and is not subject to any undisclosed limitations or defenses; and _________.

Answer 20

He will do nothing to defeat or impair the assigned right

Question 21

The best test for determining whether someone is an intended third-party beneficiary is to ask:

Answer 21

To whom is performance to be given according to the language of the contract?

Question 22

An assignee’s rights against an obligor are subject to ___________.

Answer 22

The defenses the obligor had against the assignor but not to setoffs arising after notice of assignment

Question 23

As a general rule, if the promisor fails to perform under a contract, a donee third-party beneficiary whose rights have vested can sue:

Answer 23

The Promisor.

Question 24

When a party assigns “the contract” to a third party, it results in __________.

Answer 24

an assignment of rights and a delegation of duties to the third party.

Question 25

When an obligor delegates his duties, the obligor is __________.

Answer 25

secondarily liable as a surety on the contract

Question 26

If an assignee for value discovers that the assignor had previously assigned the same contract rights to another party for value, the assignee may _________.

Answer 26

sue the assignor for breach of warranty.

Question 27

When making an assignment, the assignor warrants:

Answer 27

1) He will do nothing in the future to defeat the assigned right; 2) the assigned right is not subject to any valid defenses; 3) That the assignor has the actual right to assign.

Question 28

A writing is required for an assignment of wages because

Answer 28

it is an assignment of an interest in the real property itself.

Question 29

When a delegate assumes the duty to perform, the most important consequence is:

Answer 29

The obligee can compel performance or bring suit against the delegate for nonperformance

Question 30

Under the U.C.C., when a thief attempts to sell the goods he has stolen, the title he passes to the purchaser is __________.

Answer 30

Always Void.

Question 31

When an obligor delegates his duties under a contract, the delegate cannot be compelled to perform absent

Answer 31

an assumption of duties.

Question 32

Unless a contrary intention appears elsewhere, if a party to a contract assigns “all my rights under the contract” to a third party, that assignment __________.

Answer 32

Will be construed to include an assumption of all duties as well

Question 33

If a watch owner leaves her watch for repairs at the store where it was purchased and the store then borrows money from a bank, giving the bank the owner’s watch as pledged collateral, __________.

Answer 33

The watch owner can recover the watch from the bank immediately because the store had no right or power to use the watch as collateral, and title to the watch remained with the watch owner at all times.

Question 34

An important difference between the rights of a donee beneficiary and a creditor beneficiary is that __________.

Answer 34

a creditor beneficiary can sue the promisee on the underlying obligation, but a donee beneficiary cannot

Question 35

If a person leaves an item of jewelry with a jeweler for repair, and the jeweler sells the item to an unsuspecting purchaser, __________.

Answer 35

the purchaser has title to the item and the true owner cannot recover it because entrusting goods to a merchant who deals in goods of that kind gives him the power (but not the right) to transfer all of the rights of the entruster to a buyer in the ordinary course of business.

Question 36

A subsequent delegation of duties by the assignor will NOT

Answer 36

revoke a gratuitous assignment.

Question 37

Death of the assignor, the assignor taking performance directly from the obligor, and the bankruptcy of the assignor all

Answer 37

WILL revoke a gratuitous assignment.

Question 38

If an assignor takes payment or performance directly from the obligor, __________.

Answer 38

a gratuitous assignment is revoked but an assignment for value is not.

Question 39

Under the U.C.C., a good faith purchaser for value can be _________ or ____________.

Answer 39

A buyer without knowledge of any fraud; a person without knowledge of any fraud who takes a security interest in the goods

Question 40

Situations where an assignment must be in writing include

Answer 40

wage assignments; assignments of an interest in land; assignments of choses in action worth more than $5,000; and assignments intended as security interests

Question 41

When a delegate assumes the duty to perform, the most important consequence is:

Answer 41

The obligee can compel performance or bring suit against the delegate for nonperformance

Question 42

As a general rule, if the promisor fails to perform under a contract, a donee third-party beneficiary whose rights have vested can sue:

Answer 42

The promisor