Chp 15 Quiz - Third Party Rights

1. Billy Bob has purchased the right to hunt on Willy Bob's land. Billy Bob makes an oral agreement to assign his rights to hunt on the land this fall to his mother, Millie Bob. Is this assignment valid?
a. yes, because all assignments may be oral
b. yes, because this assignment will take place this year
c. yes, because this assignment does not involve wages or worker's compensation
d. no
> d
EXPLANATION: This assignment involves real property. Therefore, the Statute of Frauds requires that it be in writing.

2. Fran goes to buy a used car from "Honest Pete." Pete pulls a gun on her in his office and forces her to sign a contract in which she agrees to buy a 1976 Pinto for $5,000. (The car's fair market value is $200). Later, Pete assigns his rights to receive the $5,000 to his friend Jake. Jake goes to court to try to collect the $5,000 from Fran. She raises the defense of duress. How much money will Jake be able to recover from Fran?
a. $5,000
b. $4,500
c. $500
d. $0
> d
EXPLANATION: An obligee may assert all defenses against an assignee. A contract signed under duress is voidable, and Fran will have no obligation to pay either Jake or Pete.

3. Shade Tree Landscaping Company enters into a contract with Jill to landscape Jack’s yard, using Fertile Nursery to supply trees and bushes. Maria owns the lot next to Jack’s property. The landscaping is a gift from Jill to Jack. If Shade Tree subsequently refuses to do the job, which of the following parties can enforce the contract against Shade Tree?

a. Jack
b. Jill
c. Both a and b
d. None of the above

answer: C PAGE: 294 TYPE: =

4. Basil, a world-famous chef, signs a contract to give lessons in French cooking to Marge. Basil attempts to delegate his duties under the contract to Oliver, the operator of a hot dog concession. The delegation of duties will

a. be valid.
b. be valid only if Oliver is a highly regarded barbecue chef.
c. not be valid because performance of the contract depends on Basil’s unique skills.
d. not be valid only if Marge detests barbecued foods.

answer: c PAGE: 292 TYPE: =

5. Amanda is Billy's landlord. Billy and Amanda's contract says "Amanda shall not assign her rights to Billy's payments." Amanda assigns her rights to the payments to Matt. Is the assignment valid?
a. no, because Matt did not give consideration
b. no, because the contract expressly prohibits assignments
c. no, because Billy was not notified
d. yes
> d
EXPLANATION: A contract may not prohibit the assignment of the right to receive money only.

6. Simpson contracts with Excellent Builders to build a home. Excellent Builders assigns the contract to Handy Dandy, a builder with a poor record of completing habitable homes. Simpson would probably argue that the contract cannot be assigned...
a. due to his failure to consent to the assignment.
b. due to the lack of consideration.
c. because the assignment will materially increase the risk of nonperformance.
d. none of the above.
> c.
EXPLANATION: A right cannot be assigned if the assignment will materially increase or alter the risk or duties of the obligor.
Pg 285 Lft 3

7. Nick and Roberta contract for the sale of computer equipment, reserving the right to al­ter a particular provision in the contract. The rights of any third party beneficiary of that contract are

a. not affected by the reservation.
b. limited to the extent of the reservation.
c. limited only if the beneficiary agrees to the reservation.
d. none of the above.

answer: b PAGE: 295 TYPE: =

8. Edgar and William agree that Edgar will fix William’s car in exchange for William’s paying a preexisting debt owed by Edgar to Kate. Kate is

a. an assignee.
b. an intended beneficiary.
c. an incidental beneficiary.
d. none of the above.

answer: b PAGE: 295 TYPE: =

9. Gary works at National Real Estate Company. His contract contains a covenant not to compete. National is bought by American Real Estate Company, and Gary has no desire to work for his new bosses. He quits, and starts a competing business. Can American enforce his no-compete agreement?
a. no, because his contract deals with real estate
b. no, because his contract is a negotiable instrument
c. no, because his contract was based on trust and confidence in National
d. yes
> c
EXPLANATION: His contract is not itself a right in real estate, nor is it a negotiable instrument, so A and B are incorrect. These facts parallel Reynolds and Reynolds Co. v. Hardee.

10. Amanda is Billy's landlord. She assigns the right to receive Billy's monthly rent checks to Matt without telling Billy. Assume Billy pays his next rent check to Amanda. If Matt tries to sue Billy for the March rent payment, will he win?
a. yes, because as an obligee he has a right to a payment from Billy
b. yes, because as the assignee he has a right to the payment from Billy
c. no, because an obligor may always continue to pay the original obligee
d. no, because Billy was not notified of the assignment
> d
EXPLANATION: An obligor may continue to pay the original obligee, but only until notice of the assignment is given to him.
Pg 286 Rt 1

11. Bob and Cathy sign a contract that intentionally confers a benefit on Doug. Doug’s rights under the contract will vest

a. only if he materially alters his position in detrimental reliance on the contract.
b. only if he demonstrates manifest assent to the contract.
c. if he demonstrates manifest assent to the contract or materially al­ters his position in detrimental reliance on it.
d. none of the above.

ANSWER: C PAGE: 294 TYPE: +

12. Dan is a third party donee beneficiary under a contract in a deal that in­volves Eagle Materials Company and Fine Manufacturing, Inc. In ex­change for benefits under a contract, a donee beneficiary usually

a. does not give consideration.
b. does not give up the right to enforce the contract against either party.
c. gives consideration.
d. gives up the right to enforce the contract against either party.

answer: A PAGE: 294 TYPE: +

13. Which of the following is most likely to be the subject matter of a valid assignment?
a. a contract to receive rent payments
b. a contract to tutor a child
c. a contract to fix a car
d. a contract to receive another's worker's compensation payments
> a
EXPLANATION: b and c are personal service contracts. D is likely prohibited by statute.
Pg 285 Lft 1 & 2

14. Mary hires Tom to mow her lawn. Tom delegates his duty to cut the grass to his little brother, Scott. Assume Scott does show up to mow the lawn, and Mary wants Tom to come do it himself. Can she object to the delegation?
a. yes, because she was not given notice
b. yes, because an obligee may always object to a delegation
c. no, because all delegations are valid
d. no, because this delegation is for routine and nonpersonal labor
> d
EXPLANATION: Routine labor such as yardwork may generally be delegated without the consent of the obligee.
Pg 287 Rt 3

15. Roger and Jason agree that Jason can satisfy a preexisting debt owed to Roger by pay­ing the money directly to Peter. The designation of the con­tract as a third party benefi­ciary contract is determined by

a. the promisee’s desire to discharge the debt.
b. the existence of a debt.
c. both a and b.
d. none of the above.

answer: d PAGE: 294 TYPE: =

16. Jay signs a contract to provide lawn-mowing services to Michael. Jay can­not delegate this duty

a. because it is a personal service contract.
b. without obtaining Michael’s consent.
c. without providing lawn mowing services to a third party.
d. without continuing to be liable.

answer: d PAGE: 293 TYPE: =

17. Mona Lisa hired Leonardo to paint her portrait and then deliver the painting to her mother in Rome. Leonardo delegated both of these duties to his friend Pablo. Which of the delegations is (are) valid?
a. the obligation to paint the portrait only
b. the obligation to deliver only
c. both A and B
d. none of the above
> b
EXPLANATION: Ordinary, nonpersonal work may be delegated. When performance is based on personal skill or talents, a delegation cannot be made.
Pg 287 Lft 3 & Rt 3

18. If Jen says to Laurie, "I assign all my duties in my contract with Bob to you," what has occurred?
a. an assignment
b. a delegation
c. both A and B
d. none of the above
> c
EXPLANATION: This specific language brings about both. More general language would indicate an assignment only.
Pg 283 Rt 1

19. Murray has a $100,000 life insurance policy. He names his daughter Paula as the beneficiary. One day, a Russian satellite enters the atmosphere and plunges towards Earth at 2,000 miles per hour. It crashes through Murray's roof and squashes him. Murray's life insurance company refuses to pay Paula the $100,000. Can she sue them to recover the money?
a. yes, because she is a third-party beneficiary
b. yes, because she is an intended beneficiary
c. no, because she is an incidental beneficiary
d. no, because she has no privity of contract with the insurer
> b
EXPLANATION: A is incorrect as some third-party beneficiaries cannot sue. A more specific answer is needed.
Pg 288 Rt 4

20. Vicky makes a contract with Warren with the intent to benefit Alex. This is

a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. none of the above.

ANSWER: C PAGE: 294 TYPE: +

21. A contract between Owen and Paula expressly prohibits any transfer of rights. Despite this clause, the contract may be assigned if the as­sign­ment involves

a. a right to receive money or a negotiable instrument only.
b. rights in real estate only.
c. a right to receive money, a negotiable instrument, or rights in real estate.
d. none of the above.

answer: C PAGE: 289 TYPE: N

22. Amanda is Billy's Landlord, and collects $750 per month rent from him. She feels sorry for Matt, a struggling medical student, and decides to assign her rights to receive Billy's rent to Matt. No one notifies Billy of the assignment. Is this a valid assignment?
a. no, because Matt did not give consideration
b. no, because it lacks a legal purpose
c. no, because Billy was not notified
d. yes
> d
EXPLANATION: An assignment does not need consideration to be valid, and the obligor does not need to be notified.
Pg 286 Lft 1

23. Mary hires Tom to mow her lawn. Tom delegates his duty to cut the grass to his little brother, Scott. Scott is too lazy to mow the grass and never shows up. Who can Mary sue?
a. Tom only
b. Scott only
c. both Tom and Scott
d. neither Tom nor Scott
> c
EXPLANATION: If a delegatee (Scott) makes an agreement to benefit an obligee (Mary), the obligor can sue him for failure to perform. An obligee can always sue the original obligor (Scott).

24. Agnes wants to give $100,000 in stock to her son, Rufus. She hires Al Attorney to carry out this transaction, but the attorney negligently fails to make the transfer. Before she can hire another attorney, a piece of a Russian satellite crashes through her roof, squashing her. Can Rufus sue Al Attorney for failing to properly carry out the original transaction?
a. yes, because he is a third-party beneficiary
b. yes, because he is an intended beneficiary
c. no, because he is an incidental beneficiary
d. no, because he is not in privity of contract with Al
> b
EXPLANATION: These facts are similar to those in Holsapple v. McGrath.

25. Rudolph hires Yukon Cornelieus to shovel snow from Santa's driveway. Yukon is too busy hunting Bumbles to do the job and never shows up. What circumstance might prevent Santa from suing to enforce this contract?
a. Yukon and Rudolph's agreement was oral.
b. Yukon was not in the business of shoveling snow.
c. Santa was not aware of the contract until after it was to be completed.
d. Santa had already plowed the driveway himself.
> c
EXPLANATION: If a party is unaware that he is a donee beneficiary, the rights may not have vested yet. A third party may not sue to enforce a contract until his rights have vested.